Refinance applications have plunged and 30-year fixed mortgage rates have reached 4.8 percent, but buyer demand is still holding strong.
According to the Mortgage Bankers Association, refinance applications are down 60 percent from a year ago, and fell 4.2 percent from the week prior.
Meanwhile, mortgage purchase applications increased slightly, despite being down about 10 percent from the same week last year.
Previously, experts believed that the housing market would begin to find balance as mortgage rates rose, home prices remained high, and inventory remained low.
However, many real estate agents are finding that the competition is not ceasing yet.
Some experts are attributing this to the “fear of missing out.” Although rates continue to rise and housing supply is an issue, eager buyers are unsure when things will let up and want to take advantage of the rates and supply that currently exist.
Although rates are hovering around 5 percent, this still is well below long-term averages, which are around 8 percent. That’s why experts are intent on reminding buyers that rates are considered historically low.
While experts say affordability is increasingly becoming more of an issue for many buyers, millennials now make up 43 percent of buyers, which is the largest among the generations.
Experts say some young adults were able to pay down debts or move in with family during the pandemic, which allowed them the time to save up and enter homeownership for the first time.
With rent prices on the rise, experts say this also has encouraged more buyers to choose homeownership.
On the other hand, experts say many baby boomers are deciding to sell their homes and downsize.
Trends show that both millennials and baby boomers are moving to suburban locations and smaller towns.
Demographically, experts say the millennial buying trend should continue for a few more years, and although stay-at-home orders prompted more remote work than ever before, this, too, appears to be a more permanent situation for many.
Because rates are still historically favorable, experts believe the home demand is likely to continue. So for those experiencing fear of missing out, experts say they may have a valid reason to feel this way.
To wait even another year could mean things haven’t improved as much as experts initially had believed, and the housing market may not have found its balance yet.
However, most market experts have the same advice today as they have in the past: The decision to buy a home is a personal choice based on a buyer’s unique financial situation and goals.
Depending on a buyer’s location and finances, they may have more luck securing a home than others, experts say.
The bottom line, according to experts, is that buyers should speak with a trusted mortgage lender and experienced real estate agent to help them find the right home for the right price.