Even when interest rates dip, buyers are NOT borrowing. This could lead to a mortgage lending meltdown!
The numbers are nuts
Wells Fargo Home loans are off 90% from the same time last year! That’s right – that is no typo – down 90%!
Why are buyers not borrowing when the rate drops?
Clearly, buyers are not finding affordability – even when rates drop by some amount. There is really only one other factor that can encourage buyers to borrow.
The other factor
Prices. The bottom line is that if buyers will not or cannot borrow at current interest rates, the only number that can be moved to entice buyers is to see lower prices.
So what comes next?
Inventories are continuing to rise. Buyers are not jumping in at current levels. Some sellers who can afford to wait might move out of the market. Those that remain on the sellers that MUST sell. The pressure will be on for these folks to get their home sold and the only real option will be to lower their price.
Articles:
- https://www.cnbc.com/2022/11/02/mortgage-demand-falls-even-as-rates-slip-from-recent-highs.html
- https://www.cnbc.com/2022/11/02/wells-fargo-mortgage-staff-brace-for-layoffs-as-us-loan-volumes-collapse.html
- https://www.mortgagenewsdaily.com/news/11022022-mortgage-application-volume
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