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- The lowest mortgage rates of this year have not enticed home buyers to take out a mortgage. The number of people filing for mortgages for home purchase fell in the final week of May. The index that captures the trend fell for the fourth straight week. Applications for home purchase are now down 17 percent from this time last year.
- Existing home sale closings was down 7 percent in the first quarter from the prior year and trending to about the same decline in the second quarter. Home sales do not closely follow the mortgage trends because some homes are sold all-cash and also due to statistical variances between the two data series.
- Refinancing activity is just as odd. Low mortgage rates have not pushed people into refinancing, with the past week’s activity below the prior week and down nearly 60 percent from this time last year. Of course, many homeowners have already refinanced in the past two years, when the rates were even lower.
- Anecdotal stories from lenders are that they gave out a good number of pre-approved mortgage letters. However, those clients have never formally applied for a mortgage – yet. A shortage of inventory is causing many buyers to shop around longer. That is, there appears to be pent-up demand but the realization is being hampered due to too little inventory. Also, REALTORS® need to inform consumers about mortgage availability. Though credit conditions are tight, many consumers wrongly think 20-percent down payment is the absolute minimum to buy a home.
- Things surely cannot remain this low. With continuing job gains and some increases in inventory, more buyers will start to formally apply for a mortgage and make an offer on a home. The second half of 2014, therefore, should be better than the first half. For the year as a whole, existing home sales look to be lower by 2 to 4 percent. Mortgage applications, including the massive reduction on refinances, could drop by 40 to 50 percent this year.
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