Applications for Mortgages Reach Lowest Levels Since 2020
The financial impact of the COVID-19 pandemic caused significant disruptions to the personal finances of many Americans. Loss of income due to reduced or lost employment led to an uptick in applications for various financial aids and loans throughout 2020 and into 2021. This trend also affected mortgage applications as individuals sought substantial funds and were willing to use their homes as collateral to manage their finances. However, as the economy gradually stabilizes and people return to work, mortgage applications are now declining.
Recent data from the Mortgage Bankers Association reveals a 1.8% decrease in new mortgage applications last week, marking the lowest point since the start of 2020. Refinancing applications saw a 2% drop, now 8% lower compared to the same period last year.
Joel Kan, the associate vice president of economic and industry forecasting at the MBA, noted, “Rapid growth in home prices across various regions due to limited housing availability is impacting the purchase market and causing an increase in average loan amounts.”
While the demand for mortgages is decreasing, mortgage rates are also falling; however, this drop has not led to an increase in application numbers. The average interest rate for a 30-year fixed-rate mortgage fell to 3.15%, a 5 basis point decrease.
MBA: Mortgage Applications Decrease in Latest Weekly Survey https://t.co/JfuBYbDLk1 pic.twitter.com/MoVor3kuc0
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Despite positive economic news, including improvements in the labor market, Treasury yields have been fluctuating. Kan stated, “The 30-year fixed rate was 11 basis points lower than the same period last year, but many borrowers had previously refinanced at even lower rates.”
