Mortgage Demand Drops Despite Lower Rates

Despite a slight reduction in mortgage rates from their most recent highs, demand for mortgages fell for the fourth week in a row. According to the Mortgage Bankers Association, the volume of overall mortgage applications fell by 1.4% from the prior week. Despite dropping to 6.81% and 0.66 points, the average contract interest rate for 30-year fixed-rate mortgages remained the second-highest weekly average rate of the year.

Refinancing requests for mortgages decreased by 1% for the week and were 42% lower than during the same week last year. On the other hand, mortgage applications to buy homes fell 2% for the week and were 27% lower than a year earlier. Purchase activity has been restricted by the persistent shortage of housing inventory and the decreased purchasing power brought on by increased rates. There hasn’t been much of a rate incentive for refinance borrowers, either.

With no economic data to guide them this week, mortgage rates have remained essentially constant. In the coming week, the government’s upcoming monthly inflation report will likely significantly impact mortgage rates.

Survey Reveals Millennials & Gen Fault the Government for High Housing Prices

According to a poll by Mphasis Digital Risk, 45% of people aged 46 and younger blame the government for the rising cost of housing, which has pushed homeownership out of reach for many in recent years. In addition, nearly 90% of those polled (1,386) think it is now too expensive to buy a home, and 70% think the government needs to do more to make housing more affordable for Americans. The creator of Mphasis Digital Risk, Jeff Taylor, believes that younger Americans’ anger at governments may stem from their worry over missing out on homeownership in the wake of the Great Financial Crisis.

The gap between home prices and consumer income has increased, despite experts’ predictions that there won’t be a housing catastrophe in 2023. According to Bloomberg, first-time homeowners will need a family income of up to $90,000 in 2022, up from the previous requirement of roughly $70,000 in 2019. Low inventory levels and notable rises in borrowing rates further exacerbate the difficulties in the housing market. Although there have been hopes for a housing recovery, the indicators have been erratic and unconvincing.

As per the National Association of Realtors, the median price of existing homes in the US as of April was $388,800, a 1.7% decrease from the previous year. The lack of available inventory and homeowners’ hesitation to sell are enduring issues contributing to the market’s persistent downturn. Housing supply is still constrained by policies protecting consumers that were put in place following the mortgage crisis and by zoning laws that favor single-family houses.

CoreLogic Reports 2% Growth in Single-Family Home Prices in April

The growth in single-family home prices in April, reported by CoreLogic, was 2% year over year, the smallest increase since March 2012. Despite a weak price increase for much of 2023 being predicted by the analysis, a recovery with an estimated 5% yearly appreciation by April 2024 is anticipated. Although April was the 135th month in a row that prices increased year over year, subsequent months have seen slower growth, with prices rising 1.2% month over month starting in March 2023.

Chief economist at CoreLogic, Selma Hepp, says a combination of volatile mortgage rates, a lack of supply, and above-average seasonal monthly gains is pushing down property prices. Due to rising mortgage rates and persistent inflation worries, she expects a slowdown in home price growth throughout the summer. Hepp predicts that the increase in housing prices in 2023 will align with the 4% annual rise that has historically been the norm.