Mortgage demand dramatically increased in the second week of January, rising by more than 25% compared to the week prior. This is the most significant increase in the number of people seeking mortgages since September, when the housing market began to go into a significant slump. This change in the market has been attributed in part to a drop in mortgage interest rates, which have made it easier for many people to seek a new mortgage.
What is Going on in the Housing Market?
According to the Mortgage Bankers Association, mortgage demand increased by an extraordinary 28% between the first and second weeks of January. This happened at the same time that mortgage interest rates fell from 6.42% to 6.23% for 30-year fixed rate mortgages with conforming loan balances. This is down nearly a full percentage point from the high in October, when mortgage interest rates peaked at 7.2%.
Why is This Happening?
The rise in mortgage demand is likely due to a number of factors, but the drop in mortgage interest rates is one of the big ones. This is because mortgage interest rates affect how much people need to pay on mortgage payments, making it harder for many people to take out a mortgage. At the same time, housing inventory has remained largely stable, meaning there are many homes on the market for people to potentially purchase.
What Could This Mean for the Market?
This dramatic increase in mortgage demand could be a sign that the housing market is beginning to recover after months of decline. A combination of high interest rates and relatively low demand for housing have meant that many homes have gone unsold, or have had far fewer prospective buyers than they might have had when the housing market was stronger. Some see this as a sign that the housing market is reversing itself, and may be heating up again after months of cooling.
What Does it Mean For You?
If you are looking to buy a new home, this decrease in mortgage interest rates could be very good for you, since it can allow you to get a better deal on a mortgage. If you are looking to sell, it could also be beneficial since more people will now likely be looking to buy your home. However, whether this trend will continue or if it is just a temporary blip remains to be seen.
If you are an attorney assisting a client with a real estate transaction, you should contact the title insurers at Habitat Abstract. Our experienced staff will assist you with obtaining a title insurance policy that protects your clients and prevents unforeseen issues related to a defective title. Contact us at 1-888-99-TITLE (1-888-998-4853) or visit our contact page for more information.
