Despite Dropping Interest Rates, Monthly Mortgage Applications Fall in November
December 13, 2018
Applications for a mortgage to purchase new homes fell in November, resulting in an 11 percent drop from the same month a year ago. Given the monthly decline, the Mortgage Bankers Association (MBA) is estimating that sales of new homes likely fell 5 percent in November.
Considering that November saw a decline in mortgage interest rates, the drop in applications is surprising. A 30-year fixed mortgage had an average interest rate of 5.05 percent at the start of the month. By the end, it had decreased to 4.86 percent.
The MBA notes that affordability continues to plague the housing market. Even with a historically high employment and recently declining mortgage rates, increases in home prices continue to outpace wage growth.
November also saw a steep decline in homebuilder confidence, which now sits at the lowest level in over two years.