The number of people seeking mortgages increased slightly in the second week of November, according to a report by the Mortgage Bankers Association. This increase in mortgage applications is attributed to a decline in mortgage interest rates, which spurred some additional demand. However, there are still concerns about the state of the housing market, as some analysts fear that a much sharper decline may be on the horizon.
What Does the Report Say?
According to the report, the number of new mortgage applications increased by about 2.2% in the second week of November, compared to the previous week (although still down more than 40% compared to November 2021). At the same time, interest rates for 30-year fixed mortgages with conforming balances dropped from 6.90% to 6.67%, a small but significant decline in mortgage interest rates. The number of applications for refinancing also increased slightly, up 3% compared to the previous week, but still down 86% compared to the same time last year.
What Does This Mean?
In effect, this means that the number of people looking to purchase new homes increased slightly in the middle of November, just as interest rates started to decline. This is indicative of people gradually becoming more interested in purchasing a new home, when previously people were scared off by skyrocketing interest rates. It is a small sign of potential improvement after months of declines in mortgage applications, indicative of a cooling housing market.
Why is This Happening?
The increase in people seeking homes is generally attributed to the decline in mortgage interest rates. The current mortgage interest rate is more than double what it was at the start of the year, at 6.67%, but is down from the highest rate it hit this year, which was up to 7.16% last month. This drop in mortgage interest rates may have encouraged some people to file mortgage applications who might previously have been reticent to do so. However, there are fears that this drop may be temporary, and some analysts predict the number of mortgage applications could drop again next year.
How Could This Affect You?
If you are a prospective seller, the drop in mortgage interest rates is a good thing, because it is more likely that you will be able to sell your home for a good price. Meanwhile, buyers can benefit from a better market where less of your income needs to go to paying off higher mortgage payments. However, the market is volatile, and no one is sure if the decline in prices is a sign of a market beginning to stabilize, or a slight upturn before a much bigger drop.
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