Applications for mortgages are dropping as mortgage interest rates keep rising while home sellers are lowering their prices as additional supply hits the market, according to multiple reports.
Rates for those with loan balances greater than $647,200 rose to 4.51 percent from 4.40 percent while 30-year fixed mortgages backed by the FHA saw interest rates rise from 4.66 percent to 4.90 percent.
Mortgage application loan volume fell by 6 percent from the earlier week on an unadjusted basis. When compared to the same week a year back, volume is down by 41 percent.
“As higher rates reduce the incentive to refinance, application volume dropped to its lowest level since the spring of 2019. The refinance share of all applications dipped to 38.8 percent, down from 51 percent a year ago,” said Joel Kan, associate vice president of Economic and Industry Forecasting at MBA.
Though the total amount of active inventory for sale is still down by 13 percent when compared to a year back, it is “taking a big step closer” to last year’s level thanks to the increase in new listings.
“Price drops are still rare, but the fact that they are becoming more frequent is one clear sign that the housing market is cooling,” said Daryl Fairweather, Redfin’s chief economist.
“It goes to show that there’s a limit to sellers’ power. There is still way more demand than supply, and buyers are still sweating, but sellers can no longer overprice their home and still expect buyers to clamor at their door.”
Over the next 12 months, mortgage rates are predicted to go up, by 69 percent of survey respondents. Meanwhile, 48 percent expect home prices to shoot up during this period. Only 24 percent of respondents believed this is a good time to purchase a home.