As this spring housing season comes to its conclusion, it seems that lower mortgage rates are not attracting homebuyers in large numbers.
In toto, the volume of applications has declined by 3.3% just last week, in sharp contrast to the week before, as observed by the Mortgage Bankers Association’s seasonally analysed index. The volume was said to be 15% higher last year, when the interest rates were significantly larger.
The volume of refinance saw a decline of 6% this week, but was overall at a higher mark-up since last year, increasing by 29%. At this time in the last year, interest rates were higher by 51 points, and homeowners did not stand to benefit from the refinance as much.
The rate of interest on contracts for fixed mortgages of 30 years, on an average, with conforming loan balances ($484,350 or fewer) maintained a constant since the previous week at 4.33%. However, the points decreased from 0.43 to 0.42, inclusive of the origination fee, for all loans which required a down payment of 20%.
Joel Kan, the associate Vice President of Economic and Industry Forecasting at MBA lamented at the concern regarding economic growth in the EU and the uncertainty presented by the trade war USA has embarked with China. These factors were responsible for lowering mortgage rates in the last week.
Annually, the mortgage application for home purchases were up by 7%, but for the week, they fell 1%, making it a record third consecutive week of decline.
Sky rocketing home prices deterred buyers, even though for the last few months, the prices have been thawing out, and are currently facing the lowest gains in the last seven years. Short supply on the lower end of the market, and expensive prices in the middle of the market have weakened the sales in the spring house buying season. The declining rates of mortgage are not providing any aid in this.
According to Kan, the trade dispute may be causing the potential home buyers to deter in their resolve to purchase homes, as they fear that an escalation of the situation, or a market standstill for lack of diplomatic communication could have adverse effects on the housing market.
