Step Inside The Market - Week 25, 2023

StepInside Weekly 6/22

In this week’s recap, we will focus on the current trends within the residential real estate market, and a review of important things to keep in mind for you clients who already own homes!

❗Over the last week, the average contract interest rate for a 30 year fixed mortgage decreased to 6.73% from 6.77%

• 👀 Due to the slight decrease in rates, purchase applications ticked up by 2% over the past year. However, applications are down by 32% from last year.

• Refinance applications on the other hand were down 2% over the last week and are down 40% from last year. Due to high rates, the refinance market will continue to struggle

• It’s also important to note that According to the most recent estimates from Freddie Mac, the country is short about 3.8 million units of housing, both for rent and for sale. As long as this trend continues, we are likely to see a continuation of the slow purchase season

😨 GoBankingRates released a new survey that noted that only 12% of respondents planned on buying a home in 2023 and 30% stated that the rates are the main driver of this decision.

• Even though many are waiting out for better rates, it may not be a wise choice and predicting what rates will be in the future is unwise. If you have clients that are thinking along these lines, it is important to fall back on the old saying “Marry the house and Date the rate”!

• Thus, if you have clients who can buy now and can afford the payments, it's wise to provide this education and get them prepared to purchase with the future vision of refinancing once rates come down!

🚨 We also want to call to light two options available to your client who may have purchased in 2021 and 2022 (or before) who are struggling with payment:

• Loan Modifications: During a modification process, the borrower can “modify” the terms of their loan without having to go through a timely and expensive refinance process. For those that are struggling to make current payments but have a large amount of equity, a modification may be a great way to reduce monthly payments even during a higher interest rate environment!

Loan Recasting: For those clients who have an attractive rate but are struggling with payments, it may be wise to have them contact their loan service provider and see what options that have for a recast, If they are eligible they may be able to recast their loan based off the lower loan amount to help reduce payments! Keep in mind that typically a large payment will be needed prior to the recast, but it could be helpful for future planning!