In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses mortgage purchase applications.
- Demand for mortgages to buy a home declined modestly from the prior week, though it is up 6 percent from a year ago. Viewed from a longer-term perspective, mortgage applications for home purchases are still scratching along the bottom after the gigantic tumble from the bubble years.
- All-cash purchases, meanwhile, have shot up dramatically in the past 3 years, now accounting for about one-third of all home sales. It is the cash that is helping the housing market rebound.
- Refinance activity looks extremely difficult in a rising interest rate environment. There was a slight increase in the past week, but it is down 55 percent from one year ago. Refinance activity could easily fall to a 15-year low in 2014.
- Throughout last year and the early part of this year, the 30-year fixed rate had averaged just 3.5 percent. Mortgages rates now look to rise to 5 percent by the year’s end or by the spring of next year. Then these unimaginable low rates are gone for good. One just may be able to catch slightly lower rates some weeks when economic news turns surprisingly bad, but more likely than not one should expect to pay a higher rate in the upcoming months.