Mortgage demand has fallen to its lowest level in 27 years, despite a drop in interest rates. This is according to the Mortgage Bankers Association (MBA), which released its latest Mortgage Applications Survey on Wednesday.
The survey showed that mortgage applications decreased by 4.3% from the previous week, and are now at their lowest level since 1992. The decline was driven by a decrease in both purchase and refinance applications.
The drop in mortgage demand comes despite a drop in interest rates. The average rate for a 30-year fixed-rate mortgage fell to 3.45%, down from 3.51% the previous week. This is the lowest rate since October 2019.
The decline in mortgage demand is likely due to the economic uncertainty caused by the coronavirus pandemic. With the job market in flux and many businesses struggling, potential homebuyers may be hesitant to take on a large financial commitment.
The drop in mortgage demand is also likely due to the fact that many potential homebuyers are unable to qualify for a loan. With lenders tightening their standards, many borrowers may not meet the requirements for a loan.
Despite the drop in mortgage demand, the MBA is still optimistic about the housing market. The organization believes that the low interest rates will eventually lead to an increase in demand, as more potential homebuyers are able to qualify for a loan.
The MBA also believes that the housing market will remain strong in the long-term, as the economy recovers from the pandemic. The organization believes that the current low interest rates will help to stimulate the housing market, as more potential homebuyers are able to take advantage of the low rates.
Overall, the drop in mortgage demand is a sign of the economic uncertainty caused by the coronavirus pandemic. However, the MBA is still optimistic about the long-term prospects of the housing market, as low interest rates should eventually lead to an increase in demand.