Mortgage Demands Hits The Lowest Ever

The applications for a mortgage to buy a house had fallen significantly. This volume was almost 14% lower than the same week a year back. However, there has been an increase in prices, in spite of little supply in the market. But it must be noted here that different tiers of buyers have been seeing different pictures.

Scharf, the CEO, of Wells Fargo, said there could be more pain. Public or mortgage revenues will be down 50% from the first quarter to the second quarter Real estate values have been moderating according to him. He further said that publicly or mortgage revenues will be down 50% from the first quarter to the second quarter, of which part is price but part of which is fewer applications. Real estate values moderating in the long term is a good thing for inflation like increased rent payments and increased mortgage payments.

Fewer people are going to be refinancing their homes. This is the first time that mortgage applications have declined for first-time home buyers

Housing affordability drops even when the housing supply jumps by 19%. The mortgage demands have slipped to the lowest level ever since December 2018. This would explain why the applications for a mortgage to purchase a dream house had fallen 1% last week, as compared to the previous week. This is according to Mortgage Bankers Associations’ seasonally adjusted index which revealed that the volume was 14% lower than the same week a year ago.

However, mortgage rates still continue to remain significantly higher than they were when the year started. So, this is when the average contract interest rate for a 30-year-fixed-rate mortgage with a conforming loan balance ($647,200 or less) decreased to 5.33% from 5.46% with points dropping to 0.51 from 0.60 for loans with a 20% down payment.

Also, it must be noted that this week began with higher mortgage rates. Experts believe that inflation in Europe and the easing up of COVID lockdowns in China have taken a toll on bonds.

Also, applications to refinance a home loan which are usually more sensitive to rate moves than purchase applications had fallen 5% for the week, and were almost 75% lower than the same week a year back.

It’s astonishing to see that even when the rates have moved off their highs, the refinance demands aren’t back yet as the borrowers already had gone through the process when the rates were at a record low last year.

Active listing for homes rose at the fastest rate in June inventory was close to 19% and new listings had finally surpassed typical pre covid levels from a year ago. The markets have been seeing the biggest gains in supplies in some of the states:

— Austin up by 145%

— Phoenix up by 113%

— Raleigh, NC up by 112%

— Miami down by 16%

— Virginia Beach down by 14%

— Chicago down by 13%

The median home listing price in June hit a record high of $450,000 and the annual gains are moderating slightly, but they are still up by 17%, mostly due to the larger and more expensive homes rising, skewing the numbers to a higher dimension, affordable in the second quarter which dropped in 97% of the nation as per a report by ADAM. That’s up 69% from the quarter the year before.

The cost of owning a home has been highest since 2007.

— 35% of the average US wage

— up from 24% a year ago

— Largest jump in 22 years