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Borrowers Don’t Want the Bank’s Money
Mortgage Demand Has Now Dropped To a 27-Year Low
Michael Campbell
24 Sep
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Mortgage Demand Has Now Dropped To a 27-Year Low
Mortgage application volume has now dropped to its lowest level since 1996.
Despite the recent dip in origination fees and points, prospective homebuyers continue to steer clear of the costly loan options that are being offered. As of early September, the average contract interest rate for a 30-year fixed mortgage came down to 7.21%. This is slightly lower than the previous high of 7.31%, but still far exceeds the sub-3% rates borrowers enjoyed throughout much of the pandemic.
Being that the majority of today’s in-place borrowers have loans with rates of 4% or better, refinance applications have taken a huge hit as well. They recently fell 5% week-over-week, and they now sit 30% lower than last year’s count.
As housing supply remains thin and mortgage rates continue to consolidate above 7%, fiscal change from the Fed may be the only life line that can turn things around.
Quick Takeaways
Mortgage Application Volume Hits Nearly A 30-Year Low
The Average Interest Rate Is Now Floating Between 7.2% and 7.3%
Refinance Applications Have Dropped 30% Year-Over-Year
On Another Note
✺ Private Lenders Are Pouncing on the Opportunity to Serve As the Go-To Source of Capital for Commercial Real Estate: The SVB (Silicon Valley Bank) and Signature Bank collapse has led to many regional banks retreating from commercial real estate lending. Private lenders are stepping in to fill the void. — Bisnow
✺ U.S. Housing Market Should Stand Strong Compared to its Foreign Counterparts: The wave of interest rate hikes has had strong ripple effects throughout both domestic and foreign debt markets. However, Bloomberg purports that the U.S mortgage market is poised to exhibit a bit more resilience than Canada, China, and the Eurozone. — MPA
✺ No Access To Capital = No New Apartments: Capital constraints has led to steep declines in new construction. The number of apartment project starts has dropped 50 - 60% Year-Over-Year across various Southern and Northeastern markets. — Connect CRE
✺ Manhattan Rents Are Still Making Record Highs: The median rent in Manhattan is nearly $4,400 and the average rent remains at an all time high of $5,552. — CNBC
✺ 1 In Every 2 Homebuyers Will Have A Mortgage of $2,000+: Recent reports reveal that the average principal and interest (P & I) payment for today’s new homeowners is $2,306. This is the highest P & I payment on record, and it doesn’t even include taxes and insurance. — Black Knight
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