The Dwindling Appeal of Homeownership: Mortgage Demand Slumps by 30% Amid Rising Rates
The Dwindling Appeal of Homeownership: Mortgage Demand Slumps by 30% Amid Rising Rates
The allure of the American dream of homeownership seems to be dwindling as mortgage demand hits a slump amidst escalating rates. Concerns over additional Federal Reserve rate hikes, coupled with the looming debt ceiling impasse potentially leading to default, have catapulted the average 30-year fixed mortgage rate past seven percent on Tuesday. This is the highest it's been since the early days of March.
These escalating rates were already on the horizon last week, and their arrival has led to a 4.6% dip in total mortgage volume compared to the previous week and a 30% decrease from the same period last year. With fewer borrowers positioned to reap the benefits of refinancing under current conditions, applications for refinancing have experienced a drop of 5% week over week and 44% year-over-year.
In July 2020, a noticeable shift occurred in the home buying landscape, as described by one expert as the emergence of a housing economy of haves and have-nots. Fast forward to now, and we may be witnessing the consolidation of a new normal in the housing market. Homes on the market are scarce, borrowing rates have skyrocketed, and current homeowners feel cornered, unable to break free from their existing circumstances. This could aptly be termed as the commencement of a housing ice age, casting a somber outlook for potential homebuyers.
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