Mortgage rates dipped again last week, making the first week in March the third week that rates have taken a dive. 30 year fixed mortgage rates are back under 5%, now hovering at 4.87% and 15 year fixed mortgage rates are down to 4.15%.
In recent months, the market has trended upward leaving buyers wondering if they missed rates under 5%; however current rates prove otherwise.
Frank Nothaft, VP/Chief Economist of Freddie Mac says, “Mortgage rates saw an overall improvement this week. However, housing demand still remains weak.”
Mortgage applications dropped 6.5% last week and despite reduced rates and a flood of properties on the market the economy continues to be fragile. Nothaft explains that although the nation experienced an overall mortgage application decline, mortgage application rates depend upon the region. He adds that certain areas of the country are struggling more than others based on the unemployment rate.
Additionally, some real estate experts blame extreme winter weather conditions for deflated mortgage applications and that spring will likely bring a boom in mortgage refinances and sales.
Why Refinancing or Purchasing a Home Makes Sense Today
Although mortgage brokers are reporting a slow flow of mortgage applications, consumers may be missing an opportunity by taking the “wait and see” approach. Although the market may still be unsettled, it looks considerably better than what consumers experienced during 2009- 2010. Low prices coupled with equally low rates are making March the ideal time to get back in the mortgage refinance game:
- Rates keep dipping and remaining lowest in history. Although it seems as though we’ve had low rates for a while, what goes down must come up--get in while you still can.
- Your credit score may not look as bad as it did a few years ago. With so many people getting burned during the housing explosion several years ago, credit scores across the country took a nose-dive. However, many consumers have fought tooth and nail to bring their score up to par and may finally have a credit score that will get them back in the door with their mortgage broker.
- Lock in before rates start rising. When rates start heading north, kicking back with a 5% rate (or less) for the next 30 years will be quite a comfort.
- Mortgage brokers and banks needs loans. Loan to deposit ratios are off-kilter at many financial institutions, making you an attractive candidate.
Is Anyone Buying Homes Today?
Although the industry is reporting a low mortgage application rate, there is one area of purchase and refinance that is doing well. For the small percentage of Americans with money to burn, buying real estate is alive and well. Multi-million dollars homes and condo sales jumped by 18.6% last year with San Jose, California experiencing the highest increase in the country (27.4%). However, homes outside the million-dollar price point dropped 2.8%.
Economists attribute the rise in multi-million dollar home purchases to the revitalization of the stock market. Gary Revis, CEO/Keller Williams in Hollywood Hills, California says that his market area sales rose approximately 20% due to market improvements and an upturn in the entertainment industry.
Glenn Kelman, CEO of real estate brokerage company Redfin comments, "It hasn't been a good six months for all people, but it was a good six months for rich people. When Wall Street goes up, rich people buy homes."
Although the real estate industry sees the increase in home buying as a positive sign, a boost in middle class purchases would be ideal.