When average mortgage rates first saw sub-5% figures in 2009, it was seen as quite a massive landmark to say the very least. While the rate was not essentially a great deal lower than that of the previous week or month, it still served as something of a flag which urged buyers and homeowners to consider a purchase or refinance as soon as possible…which they did.
Unfortunately, even though the average for the 30 year fixed term mortgage has fallen below the 4% mark for the very first time, it is being treated simply as an occurrence and nothing worth taking advantage of.
Contrary to all logical expectation, mortgage applications fell last week alongside continually falling mortgage rates. Needless to say, lower rates will almost always spur further refinance activity, though such applications were in fact down the most, dropping no less than 5.2% week on week. Home purchase application were down only slightly by 0.8%, though remain at historic lows and are down 12% from this time last year.
Potential borrowers are remaining on the proverbial sidelines in their millions, despite the fact that the rates on offer are some of the very best seen in the last 60 years. It may be that they are no longer impressed by low rates given the current run, or are on the other hand fearful of entering into any new contracts in light of international and domestic economic instability.
There is also the fact that home values are also sliding at an alarming rate, which in the case of refinances is leaving many without the level of equity required to enter into any new contracts. Needless to say, at this stage it is becoming increasingly worrying that nothing will spur the much needed boom in the housing market, with many simply closing their eyes and praying for a miracle.