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Demand for mortgages fell for a second week in a row, as low inventory and rising home prices continue to weigh on the housing market.
On Wednesday, the Mortgage Bankers Association (MBA) reported that applications fell last week by almost 2% and are down 14% year-to-year — the lowest level since early 2020, before the COVID-19 pandemic began taking a toll on the economy.
Refinance applications were also down 2% for the week and 8% off where they were a year ago, according to the MBA.
"Swift home-price growth across much of the country, driven by insufficient housing supply, is weighing on the purchase market and is pushing average loan amounts higher," Joel Kan, associate vice president of economic and industry forecasting for the MBA, said in a statement.
“Treasury yields have been volatile despite mostly positive economic news, including last week’s June jobs report, which showed ongoing improvements in the labor market,” said Kan. “However, rates continued to move lower, especially late in the week.”
He added that many homeowners and potential buyers took advantage of low interest rates in 2020, leading to fewer borrowers this year.
"Refinance applications have trended lower than 2020 levels for the past four months," Kan noted.
Housing demand has skyrocketed over the past year, as pandemic-related stay-at-home orders prompted Americans to seek more space in bigger homes. Last month, home sales rebounded to their highest levels since 2005, CNBC reported.
Mortgage rates also set more than a dozen record lows in 2020, giving buyers even more purchasing power and helping to inflate home prices.
Experts believe the recent numbers could indicate the pandemic-induced housing boom is finally starting to fizzle out.
Source: Equities News