Demand for mortgages has gone down substantially over the past year, with the number of mortgages issued around 40% lower compared to the same time in 2021. Notably, this dramatic fall in mortgages has affected both financing for new homes, as well as people attempting to refinance their old mortgages. This decrease in mortgages being taken out is blamed on a number of factors, including rising interest rates, surging home prices and a lack of available inventory.
Looking at the Statistics
The total volume of mortgage applications fell by 41% between March 2021 and March 2022, according to a report by CNBC. This is just the latest month in which mortgage rates have fallen, with applications for new mortgages falling by 9% week over week. Refinancing applications have also fallen, dropping approximately 10% over the course of the past week. This has occurred at the same time that interest rates for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 4.90% from 4.80% for loans with a 20% down payment.
Why This is Happening
The decline in mortgage demand is due to a number of factors. The increase in interest rates is one of the easiest to point to, as increasing interest rates mean that home buyers and people looking to refinance will pay more for their mortgage than they would have a year ago. In addition, there is a shockingly small number of homes available compared to the number of people seeking new homes, limiting how many people will be applying for new mortgages.
What This Means For the Real Estate Market
As far as the real estate market is concerned, the decline in mortgages is a potential sign that home sales could be cooling some time in the near future. Prices have increased to the point that even relatively cheap properties may now be too expensive for the average home buyer, and increasing interest rates will discourage existing homeowners from refinancing, since that might mean paying more for their mortgage than they already do. Some fear this means that some people will refrain from looking for new homes for a while, in the hopes that cheaper homes will again become available.
What This Means For Home Buyers
For anyone looking for a new home, this combination of low inventory and high interest rates can make finding a good home in your price range difficult. However, with the right assistance, you may still find the right house waiting for you. That is why you should contact the real estate experts at Liongate Homebuyers, LLC, who can assist you with your real estate needs.
At Liongate Homebuyers, we assist our clients with a variety of services related to buying and selling real estate. We have experience handling real estate financing, especially for developers and house flippers. For more information, please contact us at 516-548-6553, or visit our contact page.
