WCM Insights: Rising Rates & Applications

Category: Market Updates
Read Time: 3min

Those who have recently considered buying or refinancing a home and those who work in the mortgage industry have watched mortgage interest rates decrease over the past several months. These low rates created a great opportunity for first-time homebuyers and sellers.

The low interest rates have created what is referred to as a seller’s market. Simply put, a seller’s market is when home prices are on the rise, but home inventory is low. However, because of low rates, buying a home is still an attractive option. For those who already have a mortgage, the low interest rates have created life-changing opportunities to refinance their mortgage and save more money. 


Low Interest Rates Won’t Be Here Forever

Lower interest rates mean lower monthly mortgage payments. Because of this, the lower interest rates dropped, the more people took advantage and purchased a home. But low-interest rates won’t be here forever. 


While the 30-year fixed rate hit a low of 2.93 percent the week of Jan. 27, 2021, it has since seen a rise of 6 basis points to 2.99 percent from a week ago. The 15-year fixed rate also hit a low of 2.37 percent the week of Jan. 27, 2021. However, it has since seen a rise of 6 basis points to 2.42 percent from a week ago.


Interest rates are monitored very closely, and they play a major role in the overall real estate market. Another important factor is mortgage applications. 



Mortgage Applications Are on the Rise

According to the Mortgage Bankers Association, mortgage applications have been on the rise over the past several months. A key factor for this increase is the low interest rates. However, more recently, mortgage applications have seen a decrease. In fact, for two weeks ending on Jan. 29, 2021 they were down 4.1 percent. 


But it isn’t all downhill. Just as mortgage rates constantly adjust to the market, so do mortgage applications. Newly updated interest rates have increased slightly, but so have the mortgage applications. At the start of February, mortgage applications have increased 8.1 percent from just one week earlier. Both conventional and government refinance applications have seen an increase as well. 


It is not uncommon for both interest rates and mortgage applications to fluctuate. The fact that there has been an increase in mortgage applications while mortgage rates rise could be viewed as a sign of market strength. For example, the ever-so-popular electric car company Tesla saw a slight dip in its stock price on Dec. 9, 2020. Although the stock saw a short-term pullback, its overall trajectory was up. Similar to the recent dip in mortgage applications, the overall trend is still up and up. 


What Does This Mean for Homebuyers and Homeowners?

For those wanting to enter the real estate market and purchase a home, mortgage application statistics don’t need to be on your top list of concerns. As a first-time homebuyer, focus instead on the interest rates and purchase price of the homes in your desired neighborhood. 


There’s no better time than now to start the process of buying or refinancing a home. Waiting for rates to reach their absolute low could have you waiting on the sidelines for a lower rate as the rates instead rise. Instead, take advantage of the current low interest rates that make right now an excellent time to get pre-approved and start looking for your dream home.


For those who already have a current mortgage, the same can be said about refinancing. Whether it be to change the loan terms, secure a lower interest rate or get cash with a cash out refinance, now is an excellent time to refinance.


At Wyndham Capital Mortgage, we are dedicated to making the homebuying process simple, fast and easy with a wide variety of mortgage programs that cater to every homebuyer’s needs. We are committed to helping you take advantage of low interest rates when you’re ready to take that first step.

Maggie joined the Wyndham Capital Mortgage team in November 2020 as a Content Strategist. She has more than six years of content creation experience, which includes launching WBTV’s digital brand Queen City Weekend (now QC Life) and garnering more than 1.1 million page views across her articles. With a love of storytelling, she hopes to bring that passion to WCM and the many families it serves. She resides in Charlotte, North Carolina, and can often be found at a coffee shop, latte in hand.

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