Mortgage rates have fallen for the second straight week, yet high borrowing costs continue to postpone slumping homebuyers.
According to the report, interest rates on 30-year fixed mortgages fell from 5.25% last week to 5.10%. Freddie Mac.. Still, interest rates remain almost 2 percentage points higher than at the beginning of the year.
A slight drop in mortgage rates has rarely motivated potential homebuyers who have been on the sidelines due to historical shortages of real estate and rising prices. Unwavering buyers are jumping at the opportunity to lock in rates before they march higher. On the other hand, homeowner refinancing plans remain at the lowest level in history.
Sam Carter, Freddie Mac’s Chief Economist, said: “Despite the recent easing of interest rates, the housing market is clearly slowing, and the slowdown is spreading to other segments of the economy, such as consumer consumer durables.”
Homebuyers Avoid Soaring Borrowing Costs
This week’s gradual decline in interest rates has little effect in relieving the pressure most buyers are facing as affordable prices fall.
The share of purchased applications decreased by 1% on an unadjusted basis compared to the previous week when volume decreased by 12%. Mortgage Bankers Association Weekly survey ending May 20th. Purchase requests are 16% less than in the same week a year ago.
“The pandemic remained close to the last lows seen in the spring of 2020, when a significant portion of the activity was withheld,” said Joel Kang, vice president of economic and industrial forecasting at the MBA. statement.
At today’s mortgage rates, monthly payments for 30-year 30-year fixed mortgages are now estimated to be $ 372 higher than last year’s rates. “Anyone who shop in today’s market will find that today’s $ 300,000 doesn’t buy the old one,” he said, as prices are still rising. Realtor.com Joel Burner, Senior Economic Research Analyst.
But this week’s fall in interest rates offers buyers the opportunity to stay in the market.
“In this uncertainty, it is more important than ever to be as proactive and act as quickly as possible. Mortgage market vice president Robert Heck said of the mortgage market. Robert Heck, Vice President, Morty, Told Yahoo Money. “We have focused on closing in less than 22 days.”
Homeowners hunt down
The opportunity to refinance is elusive.
The refinancing share of mortgage activity fell to 32.3% of total applications last week, down from 33% last week. According to the MBA, the refinancing index is 75% lower than the same week a year ago and 66% lower than January this year.
According to figures previously provided to Yahoo Money by mortgage technology and data provider Black Knight, only high-quality 832,000 candidates are mortgages by refinancing at the 5.27% rate recorded three weeks ago. Was reduced by at least three-quarters.
More and more homeowners are reluctant to sell their homes, postponed due to rising interest rates, and add to the inventory challenges facing buyers.
Will prices continue to decline?
Mortgage rate hikes are expected to continue to rise over the coming weeks and months, although this week’s rate hikes have fallen temporarily.
First American Chief Economist Mark Fleming told Yahoo Money that “the rest of the year, interest rates and even mortgages are under a lot of upward pressure.” “It wouldn’t be unreasonable to see mortgages continue to grow later this year … close to 6%.”
Gabriella is Yahoo Money’s personal financial reporter. Follow her on her Twitter @__ gabriellacruz..