American homeowners are currently submitting fewer mortgage applications than usual due to concerns about a possible recession and an economic slowdown, making people hesitant to engage in significant financial transactions. Consequently, mortgage rates have been decreasing over the past few weeks, falling by 24 basis points in the last two weeks. However, despite these reductions, homeowners are not showing much interest in taking out new mortgages, with overall mortgage demand declining by 5%.
Joel Kan, the associate vice president of economic and industry forecasting for the Mortgage Bankers Association, stated that “Mortgage rates decreased for the second week in a row, with growing concerns about an economic slowdown and increased risks of a recession contributing to lower Treasury yields.”
Kan also mentioned, “Rates are still considerably higher than they were a year ago, which is why applications for home purchases and refinances continue to be low. Purchase activity is limited by ongoing affordability issues and a shortage of available homes.”
Mortgage applications fall for the second straight week https://t.co/872Po2gvhh pic.twitter.com/r0B78ignaY
— The Hill (@thehill) July 6, 2022
Reports from Realtor.com indicate that the number of homes available for sale has somewhat recovered since a significant decline several years ago. However, compared to the same period in 2019, the inventory of homes on the market is currently 53.2% lower.
Danielle Hale, the chief economist at Realtor.com, mentioned, “Our data for June shows that inventory recovery has accelerated, marking the second consecutive month of growth in active listings in nearly three years. We anticipate that these improvements will continue.” Hale also noted that “The average buyer has not yet experienced substantial relief from rapidly selling homes and historically high asking prices.”
