Slight Dip in Mortgage Rates Fails to Boost Home Purchase Applications

The Biden Administration has nearly destroyed the housing market. His policies have made buying a home very unlikely for the vast majority of those under 40.

Mortgage interest rates experienced a slight dip last week, with the average contract rate for 30-year fixed-rate mortgages on conforming loan balances ($766,550 or less) decreasing to 6.82% from 6.87%. Despite this reduction, which marks the lowest rate since February of this year, applications for home purchase mortgages fell by 4% compared to the previous week. This decline, reported by the Mortgage Bankers Association (MBA), suggests that ongoing affordability challenges continue to impact potential homebuyers. The affordability issue is exacerbated by persistent home price appreciation in many markets, making it difficult for buyers to enter the market even with slightly lower interest rates.

Mortgage demand drops to lowest level since 1996 https://t.co/bXgA0AWaVI

— Daryl Franklin (@ownbusinesses) July 24, 2024

Joel Kan, an MBA economist, noted that these affordability challenges are likely keeping potential buyers on the sidelines. Additionally, many prospective buyers may be waiting for even lower interest rates, anticipating potential cuts by the Federal Reserve. While mortgage rates do not directly follow the Federal Reserve’s decisions, they are influenced by the yield on the 10-year Treasury note. If investors believe that inflation is easing, mortgage rates could decrease further. Analyst Ivy Zelman suggested that a more significant drop, possibly by 100 basis points, could provide the necessary momentum to stimulate the housing market, especially if rates drop into the high 5% range.

PulteGroup, one of the nation’s largest homebuilders, is providing an upbeat sales forecast for the rest of 2024 despite needing to offer incentives to boost demand as buyers struggle with persistently high mortgage rates.https://t.co/hDq8pB3oVZ

— CoStar News (@CoStarNews) July 24, 2024

Refinance applications remained relatively flat, with a marginal increase of 0.3% for the week. However, demand for refinancing is still 38% higher than the same period last year, though it is recovering from an extremely low level. The slight increase in refinance applications was driven by conventional and FHA application activity, as some borrowers took the opportunity to act on the slightly lower rates. Kan noted that the conventional refinance index reached its highest level since September 2022, indicating some movement in the market despite the generally stagnant conditions.

New home sales fell slightly in June to 617,000, less than expectations.
May sales revised up to 621,000 from 619,000.
Median sales price rose 2.5% in June to $417,300.

Elevated mortgage rates and steep home prices continue to sideline homebuyer demand.#HousingMarket pic.twitter.com/4GTCVKR9yC

— CambrianMacroResearch (@CambrianMR) July 24, 2024

The current housing market is characterized by a supposed complex interplay of factors, including persistent high home prices, fluctuating interest rates, and economic uncertainty.  All thanks to Joe Biden and Kamala Harris and their mismanagement of the economy. As potential buyers and current homeowners see these challenges, the market’s future trajectory remains uncertain. The anticipated actions of the Federal Reserve, along with broader economic indicators, will likely play a crucial role in shaping mortgage rates and, consequently, housing market activity in the coming months. The high rates will continue to repel buyers and the continuous billions thrown around the world by Biden will continue to make the rates increase while destroying the dollar. This all makes it worse by the week for the American people.

Key Points:

• Mortgage rates dropped slightly to 6.82%, the lowest since February.
• Home purchase mortgage applications fell by 4%, reflecting ongoing affordability challenges.
• Refinance applications were flat, up just 0.3% for the week.
• Potential homebuyers may be waiting for further rate drops, possibly influenced by expected Federal Reserve actions.
• The housing market faces challenges with high prices and economic uncertainty.

James Kravitz – Reprinted with permission of Whatfinger News