As home loan rates have decreased since 2018, significant savings abound for anyone who has purchased a home in the past two years and is contemplating refinancing
. For example, those who hold a $250K mortgage could save roughly $2,200 annually as rates are currently down by 1.25%, the lowest since 2016. Unfortunately, this is not good news for home shoppers who
are still on the hunt due to general economic concerns.
While refi applications have more than double since last year, they were down eight percent last week in contrast with the preceding week. This is still considerably higher than the applications received in July of this year. Refis soared 37% above norms
two weeks ago. While now is a great time for refi, overall mortgage applications for new buyers
are surprisingly low given current interest rates. For example, the average 30-year-fixed-rate mortgage loan under $484,350 is hovering right at an impressive 3.94%
Low mortgage rates typically result in increased mortgage applications, however low inventory cannot keep up with high demands for housing both new construction and pre-existing. Prices are making if difficult for new home buyers who would otherwise be
eager to submit mortgage applications.
The possibility of a recurring recession is of most concern for would-be buyers and likely contributes to the discrepancy between expected mortgage applications versus that which has been submitted thus far. The good news is that home prices are
gradually stabilizing as sales prices increased 3.1% in July with a gain of 3.3% in May. A healthy economy is manifested in home price growth that is consistent with increased wages. When prices rise and wages do not, the housing market
cannot be sustained.
"Predicting on a Curve"