Mortgage demand fell last week, even as the average long-term interest rate fell to its lowest level in almost two months, according to data from the Mortgage Bankers Association released on Wednesday.
The volume of mortgage purchase applications fell 4% in the week ended March 31 compared to the previous week, the MBA said.
Purchase requests fell a whopping 35% year over year during the same weekly period.
According to MBA chief economist Mike Fratantoni, a lack of available inventory is the main reason for dwindling demand during what is usually a busy time of year in the residential real estate sector.
“Spring is here, but the housing market is missing the usual burst of supply and buying activity that usually marks the season,” Fratantoni said in a statement.
“Following four weeks of increasing request for purchase activity, this week’s volume declined somewhat, even with another small drop in mortgage rates,” he added.
Application volume fell despite a fall in 30-year fixed-rate mortgage rates, which fell 5 basis points to a seven-week low of 6.4% for the week.
The volume of mortgage refinance applications was also down 5 percent week-on-week and 59 percent year-on-year – a sign that homebuyers are still sitting on the sidelines.
Mortgage rates have fallen steadily as fears of trouble in the US banking sector ease and fuel optimism that the Federal Reserve will soon halt raising rates.
However, mortgage rates are still much higher than a year ago.
“We expect strong demand from first-time home buyers over the next few years given the large number of millennials who are reaching the prime age for first-time home buyers, but affordability remains a real challenge in this environment,” added Fratantoni.
US home prices began to fall in response to the rise in mortgage rates over the past year. US home prices fell in February for the first time since 2012 year-on-year, according to the National Association of Realtors.
The drop sparked a record 131 consecutive months of gains.
Last month, famed Yale economist Robert Shiller advised prospective home buyers to delay their purchases for about six months to secure a better deal in the refrigeration market.
https://nypost.com/2023/04/05/us-mortgage-demand-is-slumping-despite-rates-hitting-7-week-low/ US mortgage demand collapses despite interest rates hitting 7-week lows