The Mortgage Bankers Association (MBA) has released its latest weekly report, shedding light on the dynamic landscape of the housing market. For the week ending September 8th, MBA's Market Composite Index showed a slight decline of 0.8 percent in mortgage applications on a seasonally adjusted basis. While these numbers reflect national trends, it's important to understand how these dynamics are affecting the local Mount Juliet, TN market, where only 21 homes are currently listed under $450,000.
National Mortgage Application Trends:
1. Refinance Applications Decline:
The Refinance Index took a significant hit, dropping 5 percent week-over-week and registering a 31 percent decrease compared to the same week in 2022. This decline is a direct result of the recent surge in mortgage rates. As the 30-year fixed mortgage rate increased to 7.27 percent last week, it became 40 basis points higher than late July rates. This surge has led to minimal refinance activity and reduced incentives for homeowners to seek new mortgages at higher rates.
2. Purchase Applications Show Resilience:
Contrary to the refinance market, the seasonally adjusted Purchase Index exhibited resilience by rising 1 percent. However, it still fell 11 percent before adjustment. Despite the increase in rates, conventional loans experienced a 2 percent gain over the week, indicating persistent demand in the housing market.
Local Market Insights for Mount Juliet:
While the national trends are mirrored in the Mount Juliet market, there are unique characteristics at play. With just 21 homes listed under $450,000, the local market is grappling with limited affordable housing options, a challenge that has contributed to increased competition among buyers.
Impact on Local Buyers:
Limited affordable listings in Mount Juliet have left prospective buyers facing a tough challenge in finding homes within their budget. The resulting competition among buyers may drive prices even higher. While some buyers have decided to sit on the sideline while rate have continued to rise other buyers push forward. "We know rates are high right now, but we also know if rates drop again, it could get crazy like it was back in 2021. We lost out on so many homes the last time we tried this, and we never want to go through that again. We have our down payment ready to go, so now is the right time for us to buy. We took last year off, and it ended up costing us around $20,000 to rent. That doesn't include the cost of moving, applications, and other deposits. If rates drop again in a couple of years, that's great; we will refi then, and we will also have a couple of years of equity we have paid down." - Sarah M.
Opportunities for Sellers:
On the flip side, sellers in Mount Juliet may find themselves in a favorable position due to the low inventory. This could result in quicker sales and potentially higher selling prices for their properties.
Mortgage Rate Impact:
It's essential to remember that for every 1% increase in the 30-year mortgage rate, buyers lose around 10% of their buying power. This is a crucial factor contributing to the slowdown in the market. Despite the slowdown, homes are still selling due to the lack of inventory. homes are still selling, driven by the persistent shortage of available properties.
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