Last week, United States mortgage rates had the most dramatic decline of 2023 and was the catalyst for a week over week lending increase.
Bank mortgage applications rose by 3% last week for new mortgages. Despite the jump, the applications were still 18% below last year. The reason for the jump was primarily due to 30 year fixed mortgages going to about 7.6%, a .2% drop from the week before thanks to the Federal Reserve holding rates. Slower than expected job growth was also a factor as it caused most analysts expect the Federal Reserve to hold rates for the foreseeable future.
With such a high percentage of the nation’s homeowners locked into lower rates, the refinancing market for banks will not come back anytime soon ,as the refinancing market was still down 7% year over year. Homeowners that had decent credit over the last couple of years locked in at below 4% leaving no reason not only to refinance, but also to look for new housing options.
The result of high interest rates has been a very slow real estate market, but with home values holding steady. Declining interest rates would need to continue in order to open up supply of homes.
In contrast to last week, the next two weeks have few potential earnings reports and Fed meetings in order for the market to react. But long term Treasury Yields are well off of their highs after the Federal Reserve did not raise rates last week.
While the move was dramatic for a one week period, the lending market has yet to open up for banks in a meaningful way.