The Mortgage Bankers Association announced this week that the demand for home loans in the US slid to a 13-year low, despite record-low mortgage rates. According to Reuters, requests for mortgages fell by 3.1 percent in early July which was the lowest level seen since December 1996. Refinancing has also slowed down, falling 2.9 percent.
Those that are looking for mortgages are enjoying extremely low rates. The average 30-year mortgage rate is currently at 4.69 percent which is just slightly higher than the record low set back in March. But experts say high unemployment rates and foreclosures mean many people aren’t taking advantage of those low rates. Interest in home buying also slowed when the homebuyer tax credits expired at the end of April.
Some experts are predicting another drop in home values, but most economists say they don’t think it will be nearly as bad as previous declines. “It’s sort of a self-fulfilling prophecy, but if there’s going to be a double-dip you might as well stay on the sidelines as opposed to coming in to buy,” Taylor Woods, president of Genpact Mortgage Services in Irvine, California, a unit of Genpact Limited (G.N), told Reuters. “With as much turmoil as there is around loans that need to be modified, short sales, foreclosures — all of those signs really indicate to buyers and investors that there will be better prices come tomorrow,” he said.