Home mortgage applications are on the rise giving a false impression that more homes are being sold. With mortgage rates dipping below 5%, homeowners looking to refinance account for the rise in loan applications. While mortgage applications for new homes declined, refinancing applications were up over 10%.
Sadly, the housing market in these tough economic times has hit a new dismal record. According to the Mortgage Bankers Association, mortgage applications for home purchases sank to a 9 year low last week. With reports that the economy is improving, this is not good news for the housing market, which appears to be on the decline again.
What is the cause of the decline? In these tough economic times, where unemployment is at a 25 year high, potential home buyers are leery. Even with record low interest rates and a first time home buyer tax credit, it appears that many people are not willing to take the leap to home ownership. Looking ahead with the homeowner’s tax credit extension now including all buyers, not just first-timers, it will be interesting to see if home sales will rise or continue to fall. We can only hope for the rise.
At the same time, current homeowners, especially those struggling financially, are looking at cutting their bills in any way possible. These record low interest rates are promising news to homeowners who are struggling, as long as they can qualify for refinancing. Homeowners who have not already refinanced are now putting in applications. Some homeowners who have enough equity in their home are also looking to consolidate other debts into their mortgage. If approved, this can give some homeowners much needed payment relief. If rates stay below 5%, applications for refinancing could very well stay steady or continue to rise.