Mortgage rates are dropping for the first time in over a year prompting an increase in mortgage and refinancing applications. This news isn’t prompting droves of homebuyers to rush to the closing table, mind you, but it is offering hope to those who have been waiting to buy a home. Over the past few years, it had become the norm to see multiple For Sale signs in one neighborhood. Today, you may have noticed, that is not the case. People aren’t selling their homes because relocating doesn’t make financial sense.
In addition to staying put, homeowners with expensive homes are refinancing. Since the latest decrease in rates, refinancing has increased by 59% compared to the same time last year. The Mortgage Bankers Association also reported seeing a slight increase in mortgage applications but noted most prospective buyers seem to be waiting to see what happens next. When you consider mortgage rates were under 5% over a 10 year span between 2011 and 2021, the current 6.47% rate isn’t very appealing.
Economists believe the worst of the housing market has passed. Mortgage rates are predicted to continue to drop and housing inventory is on the rise. Lawrence Yun, chief economist of the National Association of Realtors told CNN, “Homebuyers who were priced out a few months ago should re-check whether they can enter the homebuying market if they have secure jobs.”