Mortgage applications increased even though rates are climbing. What’s the deal?
Counterintuitive? Yes. Happening anyway? Also yes. Despite mortgage rates that are still surging, home buyers’ demand for home loans increased.
According to the most recent Mortgage Bankers Association (MBA) survey, the mortgage composite index for the week ending March 3 increased 7.4% from the week before. Loan officers say that investors are taking advantage of a slower market, and buyers are applying for more government loans and adjustable-rate mortgages (ARMs). In fact, MBA numbers show that ARMs rose 13.9%, while government loans increased by 13%.
The MBA’s vice president and deputy chief economist explained,
“Even with higher rates, there was an uptick in applications, but this was in comparison to two weeks of declines to very low levels, including a holiday week.”
So who is entering the market? One answer is that investor demand tends to increase when buyers are waiting for rates to decrease. Investors jump into the market to get a better deal while competition is low. Next, demand also rose because some borrowers understood that when rates drop, it will be a full-fledged seller’s market. This means buyer will lose the negotiation advantages they have now.
In light of this, what should you expect from the market going forward? Economists anticipate that rates will decline throughout the year. In turn, there will be a surge of buyers, which will drive up competition. One economist, Justin Fullmer, says,
“I believe we’re hitting a peak in rates now, and we’re hoping for rates in the low 5s by the end of 2023.”
In conclusion, if you’re in the position to buy soon, we encourage you to start the process. But you should never go it alone when it comes to buying a home. If you would like to strategize about your next move, contact your local agent at SurterreProperties.com today.
Source: HousingWire.com
