As Mortgage Applications Slow Down, is it Smarter to Rent?
It turns out those who rent might be smarter, after all. Applications for refinancing mortgages and new home purchases fell 4 percent from the previous week, according to Mortgage Bankers Association.
As home prices rise and the anticipation around Fed raising rates builds, it will only lead to loans getting more expensive. As such, refinance applications decreased 4 percent, seasonally adjusted, and purchase applications decreased 5 percent and applications for government loans fell 6 percent. The average loan size on refinances also dropped for three straight weeks.
“House prices have breached the peak levels of 2006, raising concerns about the long-term sustainability of current price levels,” Sean Becketti, chief economist at Freddie Mac, wrote in a report on the housing market.
This doesn’t bode well for lenders like SoFi which is trying to make a big headway into mortgage refinancing. “While we launched our mortgage business focused on larger ‘jumbo’ loans, the certainty and efficiency offered by Fannie Mae will enable us to serve more members by expanding geographically and into smaller loan amounts,” Michael Tannenbaum, VP of Mortgage at SoFi said when the lender became a Fannie Mae seller.Last modified: June 1, 2016
Srividya's work has appeared in publications like Money magazine, Advertising Age, FirstPost and The Economic Times. She has also dabbled in business intelligence solutions, and holds a Masters degree in Business and Economic Reporting from NYU.