Requests for Mortgages and Refis Increase
With mortgage interest rates hitting a new all-time low, applications for home loans and refinances are on the rise. Last week, homebuyers could get a 30-year fixed-rate mortgage with an interest rate of 4.09% (the lowest ever on record). However, economists forecast a gradual climb in rates throughout the remainder of the year.
Record-low mortgage rates may have been the reason there was an uptick in demand for home loans and refinancing requests during the week ending September 9th. According to a weekly market survey from Mortgage Bankers Association (MBA), the number of borrowers seeking financing for real estatepurchases went up 7% from the week prior. This percentage was seasonally adjusted and takes into account the national Labor Day holiday which was on September 5th. Applications for refis also showed a similar trend for the week with a 6% increase from the previous seven days.
The average 4.09% interest rate is the lowest recorded since Freddie Mac started tracking mortgage rates in the early ’70s. It attributes to the general affordability of homeownership, which was already making headlines for its cost-effectiveness in recent months.
In a city like Chicago, where there is excellent inventory for two- and three-bedroom condos, the lowered mortgage rate can mean a difference of tens of thousands of dollars over the course of the loan term. However, buyers shouldn’t expect to get such impressive rates for too long. Industry analysts from MBA believe the average rates will likely bounce back up half a percent during October, November and December. And be at 5% by the last quarter of next year.