Potential homebuyers seem to have reservations despite dips in recent mortgage rates. Total mortgage applications fell 0.4% from one week earlier, according to the Mortgage Bankers Association’s (MBA) mortgage application survey for the week ending May 4.
Purchase applications dipped by 0.2%, while refinances decreased 1% from the previous week to the lowest level since October 2008, the MBA reported. The refinance share of mortgage activity is down to its lowest level since September 2008 at 36.3% of total applications. Adjustable-rate mortgages, which typically increase when mortgage rates rise like they have been in recent months, are down to 6.5% of total applications.
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Mortgage rates for 30-year fixed loans with conforming loan balances reversed their upward climb, falling to 4.78% from 4.80%, with points (including the loan origination fee) also decreasing to 0.50 from 0.53 for 80% loan-to-value ratio loans, the MBA reported. However, it’s not swaying more buyers and homeowners to apply for a new mortgage or refinance.
Overall this year, mortgages rates have increased and are expected to move higher. The higher costs of getting a mortgage, combined with higher home prices and limited homes for sale in many markets, are prompting some consumers to hit the pause button on their homebuying plans.
Despite surging prices and continued increases expected in mortgage rates, a new survey reveals that homebuyers remain optimistic about buying a home. In fact, 65% of Americans believe that now is a good time to buy a home, down from 74% in 2014, according to Gallup’s annual Economy and Personal Finance poll, conducted April 2-11.
The survey also found that 64% of Americans said they believe home prices in their local markets will continue to rise over the next year. Despite more favorable conditions for sellers than buyers, more Americans today believe that it’s a good time to buy than in 2006 to 2008, when just 50% of Americans held that opinion. Those years marked the height of the U.S. housing bubble before the ensuing crash in home values.