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Decrease in Home Loan Requests Despite Reduced Rates

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Decrease in Home Loan Requests Despite Reduced Rates

As of late, there has been a decline in the number of applications for mortgages from American homeowners. Ongoing worries about a possible recession and economic slowdown have led to a hesitancy among the public to engage in significant financial transactions. Consequently, mortgage interest rates have been decreasing over the past few weeks, having dropped by 24 basis points in the previous fortnight. Despite these rate reductions, however, there has been a 5% overall decrease in the demand for mortgages.

“Mortgage rates have fallen for the second consecutive week, driven by increasing apprehensions of an economic downturn and heightened risks of a recession that have resulted in lower Treasury yields,” mentioned Joel Kan, associate vice president of economic and industry forecasting at the Mortgage Bankers Association.

“Although rates are still considerably higher than they were a year ago, this is the reason why applications for home purchases and refinancing continue to be low. Purchasing activity is being hindered by persistent affordability challenges and limited inventory,” Kan further explained.

Based on the most recent reports from Realtor.com, there has been a slight recovery in the number of homes available for sale since the significant drop several years back. Nevertheless, in comparison to the same period in 2019, there are now 53.2% fewer properties on the market.

“Our June data indicates that the inventory recovery has gained momentum, marking the second consecutive month of growth in active listings in nearly three years. We anticipate that this positive trend will persist,” stated Danielle Hale, the chief economist at Realtor.com, who also noted, “Prospective buyers are not yet experiencing substantial relief from the rapid sale of homes and the record-high listing prices.”

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