Data reveals a 3.5% decline in applications to pick up a home.
The US housing market has been nothing if not unpredictable over the past year, with skyrocketing prices and low inventory leaving many potential buyers feeling discouraged. However, the news of falling mortgage rates may come as a welcome surprise to those looking to enter the market.
For the fourth week in a row, the US 30-year fixed mortgage rate has fallen, dropping to a seven-week low of 6.4%.
This comes after a period of financial turbulence caused by the collapse of several banks, which helped drive down Treasury yields — a key factor in determining mortgage rates.
However, while the falling rates may seem like good news for homebuyers, borrowing costs remain high and housing inventory remains low, both of which are keeping a cap on homebuying activity.
In fact, the Mortgage Bankers Association (MBA) reported that applications to buy a home declined for the first time in a month, with their index of mortgage applications to purchase a home decreasing by 3.5%.
That being said, the MBA’s index of refinancing applications also fell, dropping by 5.4%.
This suggests that while potential buyers may be hesitant to enter the market right now, current homeowners are taking advantage of the lower rates to refinance their existing mortgages.
The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks, and thrifts to determine trends in the housing market.
The data cover more than 75% of all retail residential mortgage applications in the US, making it a reliable indicator of the health of the housing market.