Coinspeaker
Mortgage Demand Swells amid Suspended Interest Rate Hikes

Mortgage demand in the US recently climbed considerably after the Federal Reserve signaled that it could pause interest rate hikes. The increase in applications for home-buying was a direct result of reduced mortgage rates last week. Although last week’s drop in mortgage rates was not substantial, it was enough to induce current homeownership demand. As it stands, more homeowners look to refinance their mortgages to lower rates.

Mortgage refinancing applications jumped 10% last week compared with the preceding week. However, applications to refinance a home were still 44% lower compared to the same period last year. In addition, mortgage applications for home-buying rose 5% this week, although the figure was still way off on a year-over-year (YoY) basis. During the same week in 2022, applications for mortgages were 32% higher.

The average 30-year fixed-rate mortgage contract interest rate with loan balances of $726,200 or less declined last week to 6.48% from 6.50%. Additionally, inherent points also decreased from 0.63 (including the origination fee) to 0.61 for loans with a down payment of 20%. In addition, the Mortgage Bankers Association’s weekly survey said that mortgage rates decreased over the week for all surveyed loan types.

In a release, the MBA’s deputy chief economist Joel Kan talked about the mortgage application development, saying:

“Mortgage applications responded positively to a drop in rates last week, as the Fed signaled a potential pause at the current level for the federal funds rate in anticipation of inflation slowing and tightening financial conditions that will slow economic and job growth.”

Despite the Fed cooling off on further rate hikes, the prices of homes remain relatively high from previous exertions. Although home prices have appeared to ease since last summer, strong demand and low supply contribute to rising prices.

In March, mortgage demand rose despite volatile interest rates in the first quarter of the year. At the time, prospective homebuyers, seemingly unperturbed by the Fed’s inflation-induced fiscal exertions, increasingly applied for home-purchase assistance. However, despite mortgage demand jumping 7% on the week to mark a second consecutive week climb, it still paled YoY. March reports stated that the demand to buy homes was still at a 38% drawdown compared to the same period in 2022.

In the first quarter of 2023, leading home construction company Lennar Corp (NYSE: LEN) posted commendable earnings. Lennar Corp benefitted from the spike in mortgage-related activities in March, with the company’s chairman Stuart Miller, explaining in a release:

“Home buyers are considering the possibility that today’s interest rate environment may be the new normal. Accordingly, the housing market continues shifting as growing household and family formation continued to drive demand against a chronic supply shortage.”

Miller also added that Lennar Corp experienced a “generally” strong economy as the housing market continued to find its footing.

Mortgage Demand Swells amid Suspended Interest Rate Hikes

Similar to Notcoin - Blum - Airdrops In 2024

origin »

69 +