Despite a recent minor dip in mortgage rates, the volume of mortgage applications lately has plummeted, reaching its lowest point in nearly three decades.
According to Mortgage News Daily, the average 30-year fixed-rate mortgage sat at 7.25% as of September 13th, significantly higher than last year's rate of 5.89% at this time.
Freddie Mac’s Chief Economist, Sam Khater, notes that while the economy continues to perform well, rising mortgage rates are dampening the enthusiasm of potential homebuyers. Positive economic news as of late is, paradoxically, pushing mortgage rates higher, complicating the affordability equation for buyers.
Although rates could moderate in the near future due to a slowdown in inflation and job market activity, the high home prices remain a substantial burden for potential buyers.
President and CEO of the Mortgage Bankers Association, Bob Broeksmit, said “The market seems to be in a state of inertia as we approach fall, with little likely to change until there's an increase in housing inventory and a decrease in mortgage rates.”
Adding another layer of complexity, renting is becoming increasingly favorable compared to homeownership in various markets. This shift is driven by a surge in new apartment constructions and falling rent prices, which are also expected to help temper inflation rates, according to Realtor.com Chief Economist Danielle Hale.
As the economy reaches a pivotal juncture, Hale anticipates continued volatility in mortgage rates. Stability will likely only come once it’s evident that economic growth is consistent and doesn’t risk sparking another surge in inflation.Posted by Andy Mandel on