by TonyLiberty
Mortgage demand drops to the lowest levels since 1996 as interest rates hit 8%. Mortgage applications for home purchases are down 22% compared to a year ago.
Rising rates are pushing more potential homebuyers out of the market but the Federal Reserve is expected to keep raising interest rates to fight inflation.
As interest rates rise, the monthly payments on mortgages become more expensive, making it less affordable for people to buy homes.
The implications of mortgage demand dropping are significant. Home sales are likely to decline, which could lead to a slowdown in the housing market.
Home prices may also start to fall, as there will be fewer buyers competing for homes. Construction activity may also decline, as builders will have less demand for new homes. And the overall economy could be impacted, as the housing market is a major driver of economic growth.
Adjustable-rate mortgage (ARM) applications have increased — up from 6.7% just a month ago when interest rates were slightly lower. (ARMs offer lower initial rates but are fixed for shorter terms, typically five or ten years)
(It’s important to note that there are no easy solutions. Lowering interest rates could lead to higher inflation)
Read more here: https://www.cnbc.com/2023/10/04/mortgage-demand-falls-to-lowest-level-since-1996.html