It will be a long winter for loan originators as industry analysts predict that loan volume will remain low for at least the next two quarters. With the recent drops in mortgage rates, there was some hope that borrowers would be more willing to take out home loans. However, despite the rate decrease to the mid-6s, the market is still far from “normal,” As a result, experts in the field anticipate a long, chilly winter for lenders.
Since we are approaching the traditionally slower winter months, Shampa Bhattacharya, director for U.S. non-bank financial institutions at credit risk agency Fitch, indicated that lenders should anticipate lower volumes to persist at least for the upcoming two quarters.
Despite recent rate declines, demand is still close to historic lows. According to the Housing Wire Mortgage Rates Center, the average 30-year fixed-rate mortgage on December 6 came in at 6.41%, a decrease of 8 basis points from the previous week and a marked improvement over the peak of 7.16% in October. Jumbo loan rates also decreased this week by 27 basis points to 6.08%.
Mortgage applications decreased by 1.9% the week ending December 10 compared to the results from the previous week, which had been adjusted for the Thanksgiving holiday, according to data from the Mortgage Bankers Association. With overall Refis up 4.7%, the decline in mortgage rates did move the needle a little for individuals looking for a cash-out refi.
Since mortgage rates decreased in response to news of the weaker October consumer price index data, the housing market has begun to show some signs of life. For lenders, when mortgage application figures reveal a slowed decrease in year-over-year declines, that should be the genuine reason for celebration. To read more on this, click here.
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