Mortgage demand falls to 27-year low despite drop in interest rates
Mortgage demand has fallen to its lowest level since 1992, even though mortgage interest rates have fallen sharply in recent months. According to data from the Mortgage Bankers Association (MBA), mortgage applications in the U.S. declined for the fourth straight week and were only half their level compared to a year ago.
The drop in demand was attributed to an increase in unemployment, weak job creation, concerns over the economy’s recovery, and the risk of a second wave of the coronavirus. The decreased demand for mortgages could also be attributed to people still uncertain about their own financial situation and whether or not they should be taking on more debt.
The decrease in mortgage demand has had a ripple effect across the housing market. Fewer home buyers means sellers are not as able to get their asking prices for their properties. Home building companies also could be affected as they may not have the same demand for their products or see a decrease in margins.
As a result, many housing-related stocks have taken significant hits. The lower demand for mortgages will likely have an impact on the overall housing market in the coming months. However, as the economy recovers and businesses reopen, the demand for housing and mortgages may improve.