Mortgage Applications Plummet Despite Lower Interest Rates: What’s Holding Back Homebuyers?

Lower Rates Fail to Tempt Potential Homebuyers This Week

According to data from the Mortgage Bankers Association (MBA), mortgage applications decreased last week, even though interest rates on home loans were dropping. The volume of mortgage applications was down by 0.7% for the week ending March 22, marking the second consecutive week of declines. This drop in applications occurred despite a decrease in the 30-year fixed mortgage rate to 6.93%.

The decline in mortgage applications was due to both loan applications for home purchases and refinancing being lower. The Purchase Index showed a 16% decrease compared to the same week a year ago. Joel Kan, MBA vice president and deputy chief economist, mentioned that 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 as interest rates continue to fall.

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