November 24th 2023.
Are you looking to purchase a home? Now is the perfect time! According to the Mortgage Bankers Association, mortgage applications have been heated up since before Thanksgiving 2023. Contract interest rates for typical 30-year fixed-rate mortgages have dropped from 7.61% to 7.41%, along with points decreasing from 0.62 to 0.67 for loans requiring a 20% down payment.
MBA’s deputy chief economist, Joel Kan, states that although applications have increased, they’re still at very low levels. He explains that U.S. bond yields have continued to move lower due to incoming data suggesting a weaker economy and cooling inflation. Applications increased to their highest level in six weeks, but remain at very low levels compared to 2022. Refinance applications saw a 2% increase during the Thanksgiving week, but are still down 4% from the same week in 2022. Rates are now close to 75 basis points higher than last year, but more than double what they were in 2021 when refinancing was at its peak.
Kan adds that the average loan size on a purchase application was $403,600 - the lowest since January 2023 - which is consistent with other home sales data showing a gradual increase in first-time homebuyers. More and more people are turning to larger down payments to combat high financing costs - down payments rising to 14.7% in the third quarter.
Unfortunately, the housing market is still struggling. A report from the National Association of Realtors reveals that sales for existing homes in October 2023 dropped to the lowest level in 13 years. Danielle Hale, chief economist for Realtor.com, explains that the cost of borrowing is still high. However, she says that if rates can maintain their current improvement or continue to decline, more households may be able to make buying a home a viable new year’s resolution.
If you’re looking to purchase a home, now is the time to do it. Interest rates are lower than ever, and although mortgage applications are still at low levels, they’re steadily increasing. There may be higher financing costs, but larger down payments may help. Even though the housing market is still in a slump, it may be the perfect time to make that purchase you’ve been dreaming of.
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