PURCHASE LOAN APPLICATIONS HIT 30-YEAR LOWS

TODAY'S HOT NEWS

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Purchase loan applications are once again at the lowest level since 1995!

Mortgage rates are headed back up and applications are down as more inflation data comes in hot, spurring fears of another Federal Reserve rate hike in November and a more hawkish “higher for longer” interest rate policy. Applications for purchase loans fell last week to the lowest level since 1995, according to a weekly survey of lenders by the Mortgage Bankers Association. The MBA lender survey showed requests for purchase loans fell by a seasonally adjusted 2 percent from the week before and were down 28 percent from a year ago.

Requests to refinance were down 5 percent week over week and 30 percent from a year ago, to the lowest level since Jan. 2023.

Both purchase and refinance applications fell, with the purchase index hitting a 28-year low, as prospective buyers remain on the sidelines due to low housing inventory and elevated mortgage rates.

It’s an abrupt turnaround from last week, when more encouraging inflation numbers were helping bring mortgage rates down from 2023 highs. The previous MBA weekly lender survey showed homebuyer demand for purchase mortgages picked up during the week ending Aug. 25, the first increase in six weeks. And those stats are reflective of what's happening in our local market. Sales of single family homes are down 21% vs a year ago. And although the avg sale price in Boca is now just over $1.5M, homes are selling at a 7.9% discount off of asking price, and its taking twice as long to sell.

What is that telling us? It means that when owners tell me that "my home will sell fast", it depends. If a home is fixed up, declutterd and spruced up, properly staged, priced right and marketed effectively, it will sell for top dollar and quickly, quite possibly with multiple offers.


However, if the seller thinks "I can name my number, no matter what it is", they could be in for a rough ride. Overpriced sellers are disconnected from the realities of today’s mortgage payments, plus additional work needed to bring the property up to today’s buyer expectations. That seller’s home will continue to sit as more competitive properties that are either in better condition or priced more aggressively outsell the one that is priced too high. They're actually helping sell the competition and will eventually sell the home, but at a heavily discounted price.
 

What's the moral of the story?

Don't wait for that fantasy buyer to pay that unrealisticly high price. The buyer who will overpay for a home in a high interest rate climate is practically nonexistent.