Mortgage applications are still low versus their history. The concern is that we have a booming economy and record employment. Interest rates are also still low compared to their history. However, even though they are historically low, they have gone up considerably from around 3.4% to 4.5% to 4.6%. If you are comparing your month-over-month expenses they have probably gone up a good bit. If you were trying to buy a house a year ago versus now it looks a lot different.
Why are mortgage applications so low? Part of that has to do with millennials. Some millennials are having a hard time paying off student loan debt. They are also getting married later in life, so they are delaying a home purchase. Supply is still low which is driving up the prices on homes. There is also a sort of renaissance in cities where people are buying older properties to fix up along with moving downtown.
Supply and Demand
The cost based on mortgage rates is rising along with prices. This is very indicative of a supply and demand problem. We have discussed in previous vlogs on how the number of builders have dropped significantly since the pre-2008 crisis. Will we see new builders coming back into the market to fill in the supply gap? Also, as we discussed in last week’s vlog, #298 Moving Fast Into The Holiday, we are paying close attention to the consumer because savings rates have gone up. This is very important for the overall economy, as well as the market. Investors are spending money and generating revenue for companies which is having a rippling effect on portfolios.
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