Mortgage demand has hit a 27-year low according to a new report from the Mortgage Bankers Association. The drop in interest rate is being pointing fingers at for the collapse in home loan applications.
Despite the historically low home loan rates, levels of mortgage demand have declined throughout both June and July, causing major concern in the industry. This is mainly due to the negative economic future fears being created by the coronavirus pandemic. This sentiment has outweighed the obvious financial advantage presented by the lower interest rates.
The Mortgage Bankers Association’s Weekly Mortgage Applications Survey for July 24th 2020 showed that the demand for mortgage refinances fell by 4%, and demand for home purchase loans dropped by 3% compared to the previous week.
Part of the explanation for the poor numbers is also due to an uncertain job market and concern about the direction of future economic recovery. Potential homeowners are not rushing to take on this large commitment in an economic crisis.
The big question now is how will the mortgage market adapt to the slowed demand. Experts are predicting less mortgage revenue from this market in the coming years and, potentially, more consolidation in the future.
It is increasingly important that new homeowners make the decision that is right for them. Luckily there are still financial opportunities in this low rate market, so it might be a great time to get into the market and take advantage.