published : 2023-11-30

Mortgage Demand Surges as Rates Plummet to 10-Week Low

Mortgage Rates Reach Lowest Level in a Decade

A hopeful first-time homebuyer examining available homes in a quiet suburban neighborhood, taken with a Canon EOS 5D Mark IV.

For many first-time homebuyers, the American dream has been put on hold due to soaring mortgage rates and home prices.

However, there is some good news on the horizon as mortgage rates have dropped to a 10-week low, reigniting demand among consumers.

The Mortgage Bankers Association's (MBA) index of mortgage applications rose by 3% last week compared to the previous week.

In addition, the average rate on the popular 30-year loan has fallen to 7.37%, the lowest level in 10 weeks and a significant drop from just one month ago when rates were at 7.91%.

This decline in rates has helped stimulate housing demand, with applications for home purchases increasing by 5% in the past week.

A group of people discussing mortgage rates and home prices at a coffee shop, contemplating their options, taken with a Nikon D850.

Unfortunately, despite this uptick, overall application volume remains 19% lower compared to the same time last year.

On the bright side, the availability of homes for sale is slowly improving, with a 4% increase in the total number of homes for sale in September compared to the previous year.

However, the total available supply is still down a staggering 45.1% from before the COVID-19 pandemic struck in early 2020.

Although the decline in mortgage rates is encouraging, demand for mortgage refinancing has plummeted by 9% for the week and is only 1% higher than last year.

This can be attributed to the fact that homeowners who locked in lower rates in the past are hesitant to refinance at the current rates.

A stack of house keys symbolizing the dream of homeownership, with a tag that reads 'American Dream', taken with a Sony Alpha a7 III.

Despite the challenges faced by the housing market, economists believe that the Federal Reserve's aggressive tightening campaign is coming to an end, potentially leading to a further decrease in mortgage rates.

It is hoped that this will help spur greater housing demand and provide relief to first-time homebuyers dreaming of owning their own homes.

Overall, while challenges persist, the recent drop in mortgage rates offers a glimmer of hope for prospective homebuyers, signaling a potential turnaround in the market.