Lower Rates Fail to Tempt Potential Homebuyers This Week
Economy

Declining Mortgage Applications despite Dropping Home Loan Rates: What’s Holding Back the Housing Market?

Although interest rates on home loans were dropping last week, the volume of mortgage applications decreased by 0.7% for the week ending March 22, marking the second consecutive week of declines. This decline in applications occurred despite a decrease in the 30-year fixed mortgage rate to 6.93%.

Both loan applications for home purchases and refinancing were lower, with the Purchase Index showing a 16% decrease compared to the same week a year ago. According to Joel Kan, MBA vice president and deputy chief economist, homebuyers are waiting for mortgage rates to decrease further and for more homes to become available on the market. He anticipates that lower rates will eventually lead to more inventory becoming available as the lock-in effect diminishes.

Kan also noted that the gradual reduction in mortgage rates may lead to rates moving closer to 6% by the end of the year, which could further impact the housing market. Despite this decline in mortgage applications, there is optimism surrounding the potential for increased inventory and affordability in the housing market.

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