In spite of low borrowing costs and average price gains, Americans aren’t looking to take on as many new mortgages.
The Mortgage Bankers Association recorded the drop of mortgage applications to 3.3% from last week, even though mortgage interest rates remain low.
Home purchase applications dropped 1% – which was its 3rd weekly decline, however, they still remained 7% higher than they were a year ago. Also, there was a 6% fall in mortgage refinance applications.
Since January 2018, there have been steady fixed interest rates for 30 years at 4.33%.
Joel Kan, MBA’s Associate Vice President of the Economic and Forecasting stated that “Concerns over European economic growth and ongoing uncertainty about a trade war with China were some of the main factors that kept mortgage rates low last week.”
Nevertheless, there has been relief on the price increases. Last month, the average price for existing homes was $267,399, which is a 3.6% increase from the previous year – according to the National Association of Realtors. Yearly price gains ranged from 5%-6% last year.
The trade war jitters, however, may have been keeping some potential home buyers on the sidelines.
“It is possible that the trade dispute is causing potential homeowners to hold off on buying, with the fear that further escalation – or the lack of resolution – may have adverse impacts on the economy and housing market,” Kan stated.
The reduction in cheap, basic housing has also stalled sales.