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Some lenders saw a sharp increase in mortgage demand from borrowers after interest rates fell last week due to low inflation.
Still, executives and lenders say it’s too early to call this a turning point in the shrinking mortgage market.
To show just how quickly mortgage rates have fallen, Freddie Mac’s latest mortgage purchase survey found that 30-year fixed rates fell from 7.08% last week to an average of 6.61% this week This one.
The same indicator a year ago averaged 3.10%. Sam Hater, the chief economist at Freddie Mac, said mortgage rates fell this week as data suggested inflation was peaking.
Lower mortgage rates are good news, but Hater said the housing market still has a long way to go. Other leaders echoed Khater’s sentiments.
Frank Capobianco, senior vice president of Cardinal Financial, says he feels some relief.
But many are hesitant to call a change until December’s CPI numbers and the Fed’s December meeting decision are released.
J. R. Samsing, vice president of Offerpad Home Loans, said unfortunately the market has not reached an inflection point, at least not yet. “Recent rate cuts have helped, but affordability is an issue.
“If we can keep mortgage rates stable at this level, we will see more potential buyers entering the market.” Susan DeMello, director of loans at Virginia-based PNC Mortgage, said she expects loan production to continue to increase due to lower mortgage interest rates.
“The market is rising fast and falling slowly,” LO told HousingWire. increase in demand
Mortgage rates have risen as the Fed continues to raise interest rates to combat continued inflation.
However, the US Bureau of Labor Statistics reported last week that the consumer price index (CPI) rose 7.7% year-on-year in October, the slowest increase in the 12 months since January 2022. This is slightly lower than the 7.9% expected by the market.
As a result, mortgage rates began to fall. According to HousingWire’s Center for Mortgage Rates, Black Knight’s blue OBMMI optimal pricing mechanism, which includes some refinance products, was 6.59% on 30-year maturities on Wednesday, up from 7.09% the previous week.
Meanwhile, the 30-year fixed rate (over $647,200) fell from 6.97% to 6.72%. According to Wednesday’s Mortgage News Daily, mortgage rates on eligible loans were 6.64 percent.
A study by the Mortgage Bankers Association (MBA) found that lower mortgage rates increased the demand for purchase applications for all types of loans.
Conducted weekly since 1990, the survey covers 75 percent of all private mortgage applications in the United States.
According to the MBA, the market’s composite index, which measures the volume of mortgage applications, rose 2.7 percent in the week ended Nov. 11.
This increase was driven by a 4% increase in the purchases index but was offset by a 2% decrease in the refinancing index from the previous week.
MBA Brooksmith president and CEO said mortgage applications rose for the first time in seven weeks.
Mortgage rates fell below 7% for the first time since mid-October on signs of slowing inflation, but average loan amounts are now at their lowest level in nearly two years as relatively high rates remain and purchasing power decreases.
Capobianco said Cardinal Financial’s bids were up because prices were likely to be a point higher than last Wednesday than last Thursday.
At Offerpad Home Loans, analysts have seen a slight increase in applications for more suitable purchase loans as interest rates have fallen.
The company also saw a slight increase in Veterans Affairs (USA) purchase requests.
Samsung also said that this is largely due to its customer support efforts. Most consumers were not aware of the rate reduction until we contacted them.
Reference Source: Housing Wire
