Mortgage Bankers Association

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Mortgage application volumes continued their up-and-down trend from April, rising as interest rates dropped and showed signs of longer-term stabilization following the latest Federal Reserve meeting, the Mortgage Bankers Association said.

The MBA’s Market Composite Index, a measure of weekly loan-application volumes based on surveys of the trade group’s members, increased a seasonally adjusted 6.3% after coming in lower by 1.2% seven days earlier. On a year-over-year basis, activity finished 36.5% under 2022’s level.

“Mortgage applications responded positively to a drop in rates last week, as the Fed signaled a potential pause at the current level for the federal funds rate in anticipation of inflation slowing and tightening financial conditions,” said Joel Kan, MBA vice president and deputy chief economist, in a press release.

Mortgage rates fell across all categories among MBA lenders, with the most commonly used 30-year contract average for conforming loans with balances below $726,200 edging down 2 basis points to 6.48% from 6.5% the previous week. Points for conforming 80% loan-to-value ratio loans also decreased to 0.61 from 0.63.

The 30-year jumbo mortgage average for balances above the conforming amount saw a slightly larger drop to 6.33% from 6.37%, while points decreased to 0.51 from 0.54. 

Both purchases and refinances contributed to the week’s surge. The Refinance Index experienced a notable uptick, with new applications growing at its most rapid seven-day pace since January. 

“Refinance activity jumped 10% to its highest levels since September 2022, although there is only a small pool of borrowers who can benefit from refinancing with rates at these levels,” Kan said. In comparison to the same week in 2022, weekly refinance volumes were still lower by 44.5%. But thanks to the elevated activity, refinances grabbed a larger 28% share of overall volume, increasing from 27.2% during the previous survey period. 

The seasonally adjusted Purchase Index, meanwhile, increased 4.8% on a weekly basis, but application numbers still stand 32% year over year. “Lower rates from week to week have helped buyers in the market, but limited for-sale inventory remains a challenge for many home buyers,” according to Kan. 

Scarce housing supply has kept prices from falling significantly, reflected in the average purchase-loan sizes seen in 2023. While the mean purchase amount remained virtually the same compared to the previous survey, slipping by a small fraction to $440,700 from $441,100, it still sat more than 13% higher from its mark to start the year.

The average refinance size, though, headed in the opposite direction, rising 4.4% to $277,900 from $266,200. The overall average, inclusive of all new mortgage applications, inched up 0.4% to $395,000 from $393,600.

Federally backed loan applications played a big part in lifting weekly volume, particularly refinances, which surged 23.7%. The Government Index outpaced overall activity, leaping 11.9% on a seasonally adjusted basis. 

The share of federally guaranteed mortgage applications relative to overall volume, likewise, took a jump primarily thanks to new VA loans. Applications sponsored by the Department of Veterans Affairs accounted for 12.9% of activity, rising from 11.3% a week earlier. 

Shares of other government loans took a step down, though, with the portion of Federal Housing Administration-sponsored applications dropping to a 12.1% slice from 12.5%, while U.S. Department of Agriculture-backed mortgages decreased to 0.4% from 0.5%.

The contract average interest rate for 30-year FHA-backed loans, meanwhile, dropped to 6.41% from 6.43% the prior week, with points used on the mortgages edging down to 1.01 from 1.02.

The 15-year average took a steeper dive compared to other fixed loans, falling 10 basis points to finish under the 6% threshold. The rate finished at 5.91% compared to 6.01% in the prior survey. Points for 80% LTV loans increased to 0.58 from 0.55.

The hybrid 5/1 adjustable-rate mortgage average dropped 13 basis points to 5.35% from 5.48%, with points decreasing to 0.79 from 1.14. Interest in the loans, which stay at a fixed rate for the first five years before adjusting to market values, generally move in the same direction as fixed rates. The trend held true last week, with ARM shrinking to 6.8% from 7.3% in the prior survey. 

Source: nationalmortgagenews.com

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“I haven’t seen a dry spell like this in the time I’ve been in business,” Bob Yopko, president of First Equity Residential Mortgage, said of this year’s spring homebuying season. 

The purchase market is locked up with a lack of inventory thanks to elevated rates and homeowners already having secured low mortgage rates during the pandemic years. This, in turn, has made business brutal, Yopko explained.

The still-high mortgage rates that have been killing Yopko’s business averaged 6.39% as of May 4, a decline from last week’s 6.43%, according to Freddie Mac’s primary mortgage market survey (PMMS). Rates averaged 5.27% during the same period a year ago.

“This week, mortgage rates inched down slightly amid recent volatility in the banking sector and commentary from the Federal Reserve on its policy outlook,” Sam Khater, Freddie Mac’s chief economist, said in a statement.

Mortgage rates tend to align with the 10-year U.S. Treasury yield, which traded at 3.38% on Wednesday compared to 3.43% about a month ago.

“Mortgage rates spreads are bad now, meaning mortgage rates should be a lot lower today versus the 10-year yield,” Logan Mohtashami, lead analyst at HousingWire, said. 

With financial credit getting tighter and the Fed no longer buying mortgage-backed securities (MBS), it has been hard for the spread to get better in this environment, Mohtashami explained.

“Mortgage rates should be 5.55%, not 6.5%,” he said.

Slower housing market

With mortgage rates remaining elevated, many sellers feel locked in by their current low mortgage rate. As a result, swaths of homeowners are planning to wait until rates come down before selling, leading to fewer newly listed homes compared to a year ago. 

“The housing market is moving slower this spring. In a typical year, we would expect to see the number of homes for sale begin to increase more significantly from this point forward,” Jiayi Xu, an economist at Realtor.com, said.

Buyers who are still interested in buying in the busiest season for the residential housing market are acclimating to the current rate environment, Khater noted, but the lack of inventory remains a primary obstacle to affordability. 

Due to limited options available on the market, buyers are increasingly turning to newly constructed homes, Xu added.

Another source of frustration for buyers are the new Federal Housing Finance Agency (FHFA) loan-level price adjustments (LLPAs) that went into effect May 1. The FHFA’s “revamped” LLPA matrix differentiates pricing by loan purpose, with grids for purchase loans, limited cash-out refinance loans, cash-out refinance loans and additional LLPAs by loan attribute. 

One goal for the changes was to make homeownership accessible for first-time homebuyers and those with low and moderate incomes. But the new changes have faced pushback from the industry, with opponents claiming that the LLPA adjustments are penalizing middle-class American families by raising fees on good-credit borrowers while lowering fees for higher-risk borrowers.

“According to this new policy, well-qualified borrowers with scores ranging from 680 to above 780 may need to pay slightly more than before to offset the reduction in fees charged to buyers with low credit scores,” Xu said. 

In the weeks ahead, the Mortgage Bankers Association (MBA) expects the ongoing uncertainty in the financial markets to keep mortgage rates volatile, but expects rates to ultimately fall below 6%-levels.

“We still anticipate they will fall, ending the year closer to 5.5%,” MBA President and CEO Bob Broeksmit said.

Source: housingwire.com

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Mortgage rates increased this week after more than a month of straight declines, prompting rate-sensitive buyers to put off their purchasing plans once more.

The rate on the average 30-year fixed mortgage rose to 6.39% from 6.27% the week prior, according to Freddie Mac. Rates had slipped nearly a half-point since early March, but edged higher this week after several Federal Reserve members said further interest rate hikes may be needed to tame inflation.

The uptick in rates triggered some first-time buyers who came back to the market briefly to retreat once again, while homeowners remain reluctant to sell, exacerbating the acute inventory shortage this spring season.

“We had a surge of buyers probably a month and a half ago, but that’s waned,” Sean Dycus, a realtor at Mainstreet Properties, told Yahoo Finance. “Buyers are still out there, but we’re going to have less listings coming on. That’s the big prediction: Homeowners are going to hold back from listing this year because of rates.”

Buyers retreat as rates surge

Would-be buyers were quick to pull back from the market as rates climbed last week, a sign that affordability remains a primary concern again this year.

The volume of purchase applications decreased 10% from one week earlier, the Mortgage Bankers Association survey for the week ending April 14 found. Overall, purchase demand was 36% lower than a year earlier on a seasonally unadjusted basis.

“Affordability challenges persist and there is limited for-sale inventory in many markets across the country, so buyers remain selective on when they act,” Joel Kan, MBA’s deputy chief economist, said in a statement.

People look at a home for sale during an open house on in San Francisco, California. (Credit: Justin Sullivan/Getty Images)

He noted that a 10% drop in applications for mortgages backed by the Federal Housing Administration — which have less stringent requirements — and the increase in the average purchase loan size to its highest level in a month signal that “first-time buyers have pulled back.”

At the same time, investors or buyers on the higher-end of the market may also have some difficulties qualifying for loans this spring because the spread between jumbo loans and conforming 30-year fixed rate loans remains tighter than a year ago, meaning that lending standards for these loans are stricter.

“As banks reduce their willingness to hold jumbo loans, we expect this narrowing trend to continue,” Kan said.

Inventory challenges remain

As mortgage rates pick up, homeowners are becoming even more hesitant to sell and give up their current mortgage rate. That’s evident in new listing data.

Only 66,000 single-family homes were newly listed on the market this week, Altos Research found, with 25% of those already under contract. By comparison, there were 100,000 new listings with 30% under contract immediately a year ago at this time.

“Demand is still strong,” Doug Duncan, senior vice president and chief economist at Fannie Mae, told Yahoo Finance. “There just isn’t the supply.”

Real estate agent Brad Smith posts a for sale sign outside of an open house in San Francisco, California. (Photo by Justin Sullivan/Getty Images)

The lack of inventory available means that buyers looking for some price relief may have a harder time finding deals with sellers newly emboldened.

For instance, builders are pulling back their price reductions as the selling season approaches, according to the National Association of Home Builders,

At least 30% of builders reduced their home prices in April, down from 31% in March and February, 35% in December, and 36% in November. The average price reduction was 6% in April, down from 8% in December.

“While it varies from region to region, home prices at the national level may fall 1% or 1.5% by the end of the year, so not much,” Duncan said.

Still, 59% of builders are using incentives to draw in buyers, a potential opening for opportunistic buyers still in the market.

“Right now, investing in a new house is worth considering, you’ll get incentives from the builder and potentially a better rate on the house,” Dycus said. “It can be a bit harder to get deals on existing homes, or something you really like, especially if competition is up.”

Gabriella is a personal finance reporter at Yahoo Finance. Follow her on Twitter @__gabriellacruz.

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Source: finance.yahoo.com

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Job growth surprised again in April, this time rising more than expected. Total nonfarm payroll employment rose last month by 253,000 jobs, compared to March, according to data released Friday by the Bureau of Labor Statistics. 

“Job growth for the prior two months was revised downwards, but on net, the labor market is stronger than expected, including wage growth up 4.4% over the past year,” Mike Fratantoni, the Mortgage Bankers Association’s chief economist, said in a statement. “This rate of growth is likely faster than would be consistent with the Federal Reserve’s 2% inflation target.”

The unemployment rate also fell slightly to 3.4%, with 5.7 million persons unemployed at the end of the month. Overall the unemployment rate has shown little net movement since early 2022. 

“The unemployment rate fell and is now lower than it has been since 1953,” Lisa Sturtevant, Bright MLS’ chief economist, said in a statement. “The strong employment report adds to the complicated labor market picture, as it comes on the heels of this week’s JOLTS report that showed that the number of overall job openings fell as fewer people were switching jobs.”

With the resiliency of the job market and the continued wage growth, experts believe the Federal Reserve may not be done hiking interest rates just quite yet. 

“The April data suggests that the Fed may not be able to pause interest rate hikes when they meet next month,” Sturtevant said. “And while the risks of a 2023 recession have increased, it is very likely that a downturn later this year would be mild, without significant job losses that often accompany economic recessions, given the current strength in the labor market.”

Sturtevant also said that she does not expect the housing market to take a major hit if labor market conditions weaken. 

“The strength of most local housing markets is highly dependent on the local employment situation, and we’ve been seeing that relationship play out over the past several months,” Sturtevant said. “Even if the Fed increases the federal funds rate again next month, it is possible that mortgage rates could come down, with lingering uncertainty in the banking sector and declining consumer confidence pushing investors to safer investments, like U.S. Treasuries. Falling mortgage rates would provide more juice to the U.S. housing market, which has been relatively subdued this spring.”

The construction sector added 15,000 jobs in April, thanks to a large uptick in the specialty trade contractors segment of construction, which gained 26,700 jobs, with residential specialty trade contractors gaining 16,700 of those jobs. Meanwhile, residential construction of buildings lost 1,800 jobs and heavy and engineering construction lost 8,100 jobs, month over month. 

““Despite declines in the number of single-family homes under construction, residential construction labor demand remains strong. Building a home does not readily lend itself to outsourcing and automation. Home building still requires manual labor as a key input into the production process,” Odeta Kushi, First American’s deputy chief economist, said in a statement. “There are still a near-record number of homes under construction, and you need more hammers at work to build these homes. Additionally, builders have had trouble attracting and retaining skilled construction workers, making them less likely to part with skilled workers.”

The real estate, and rental and leasing sector gained 9,800 jobs in April, with real estate gaining 8,700 jobs, and rental and leasing added 1,100 jobs. 

In February 2020, a combined 300,000 were employed in “real estate credit” and as mortgage and non-mortgage loan brokers. As of March 2023, there were roughly 340,800 people in those jobs, suggesting that the industry still has a large number of cuts to make in the coming months as the housing market remains at a much cooler level than a year ago. 

The lion’s share of the job growth in April came from gains in the professional and business services sector (up 43,000 jobs), the leisure and hospitality sector (up 31,000 jobs), the social assistance sector (up 25,000 jobs), and the health care sector (up 40,000 jobs).

“As was the case in recent months, job growth remains concentrated in just a few sectors, particularly health care and hospitality. Although we have seen several public layoff announcements, the job growth in these few sectors continues to offset losses in technology and other industries, including the mortgage market,” Fratantoni said. “A solid job market will provide support to the housing market. However, the inflationary pressures from this strong wage growth will likely prevent the Federal Reserve from cutting rates any time soon, even if they now are at the peak for this rate cycle.”

Source: housingwire.com

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Mortgage rates are still rather elevated relative to recent years, and it has made homeownership far less affordable for many Americans.

One way to potentially save money when buying a home is to use an adjustable-rate mortgage, or ARM. An adjustable-rate mortgage is typically a 30-year loan that has a fixed interest rate for a certain length of time, usually five or seven years. After this time, the mortgage’s interest rate will periodically adjust higher or lower depending on prevailing interest rates at the time.

To be sure, ARMs aren’t right for everyone. But they generally have lower interest rates than comparable 30-year fixed-rate mortgage loans. So, here’s a look at just how much of a difference an ARM can make in your monthly payments and your long-term cost of ownership.

What’s the interest rate difference between fixed- and adjustable-rate loans?

According to the Mortgage Bankers Association (MBA), the average interest rate on a 30-year fixed-rate mortgage in the last week of April 2023 was 6.55% with 0.63 points. (Note: Mortgage points are an upfront cost associated with a mortgage and one point equals 1% of the initial loan amount.)

On the other hand, the average 5/1 adjustable-rate mortgage had a 5.47% rate during the same week, with 1.18 points. When you sign on for a 5/1 ARM, it means your initial rate is fixed for the first five years, and then adjusts according to a certain benchmark index every year thereafter.

How much could you save with an adjustable-rate mortgage?

Let’s say you want to buy a $500,000 home with 20% down, so you’ll need a $400,000 mortgage. You’re trying to decide if a 30-year fixed-rate loan or a 5/1 ARM is the best choice for you.

More: Check out our picks for the best mortgage lenders

As we’ll discuss later, there are other things to consider besides the cost difference, but here’s how the numbers work out over the first five years of ownership.

If you obtain a 30-year fixed-rate mortgage with the average 6.55% interest rate, your monthly principal and interest (P+I) payments will be $2,541. With a 5/1 ARM that comes with a 5.47% interest rate, your monthly P+I would be $2,264.

Now, notice that the typical ARM has higher points, and this would mean an additional upfront cost of $2,200. However, the difference in mortgage payments would mean saving $16,620 over the first five years of ownership, so even with the higher points, your out-of-pocket costs would be more than $14,000 less over five years with an ARM.

An ARM isn’t exactly a free lunch

As you can see, an adjustable-rate mortgage can result in significant cost savings over the first few years you own a home. And if rates fall between now and when your initial rate period expires, it’s even possible your rate could go lower once it adjusts.

However, it’s not a wise financial move to plan on that. The smart move is to assume that your ARM’s interest rate will go up after your first adjustment and plan accordingly. Therefore, an ARM is usually best for homeowners who plan to sell their home before the initial rate period ends or those who are confident they’ll be able to refinance their loan with favorable terms before it does — and there is absolutely no guarantee you’ll be able to.

The bottom line is that while an adjustable-rate mortgage can be a good tool to increase your home’s affordability, it isn’t without its drawbacks. 

Source: fool.com

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More than two dozen trade groups have called for the reduction or elimination of loan-level pricing adjustments (LLPAs) on Fannie Mae and Freddie Mac loans, a move that could push mortgage rates even lower than they already are.

Put simply, mortgages lenders rely on risk-based pricing to set the eventual mortgage rate you receive. So all else being equal, a borrower purchasing a single-family home with 40% down will receive a lower interest rate than an investor purchasing a four-unit property with 20% down.

It makes sense to charge borrowers a higher interest rate if they present more risk of default, despite the fact that a higher interest rate may actually lead to an increased risk of default. That’s just the way it is.

But powerful groups like the Mortgage Bankers Association, the National Association of Realtors, and many more want to reduce or eliminate LLPAs going forward, per a recent letter to FHFA boss Mel Watt.

LLPAs Can Raise Effective Mortgage Rates Significantly

As mentioned, LLPAs affect the final mortgage rate a borrower receives. So a borrower with a 620 credit score purchasing a home with just 3% down via Fannie Mae’s 97% LTV offering may get hit with a 3.5% pricing hit to compensate for that risk.

That adjustment alone may increase their interest rate by around 1% or more. Generally, these pricing hits are built into the interest rate and a pricing hit of 1% may translate to a rate increase of 0.25% or so.

The groups argued in their letter that the LLPAs could total up to 4% of the loan value for some borrowers, which seem to hit first-time home buyers, along with low- and moderate-income buyers, the most.

Part of this phenomenon could be attributed to the fact that new buyers don’t know the rules of the game right off the bat, and often apply for mortgages with poor credit or a limited down payment.

The result is a much higher interest rate than wealthier buyers, or those with better credit and more to put down, such as move-up buyers.

At the same time, Fannie and Freddie have increased g-fees by roughly 164% between 2009 and 2014, another fee that is typically passed along to the borrower via a higher interest rate.

Together, this means higher effective mortgage rates for borrowers, despite the massive declines seen since the financial crisis nearly 10 years ago.

Tip: What mortgage rate will I receive with my credit score?

Mortgage Quality Pristine, Yet Fees Continue to Be High

The general argument is that mortgage quality couldn’t be better, yet Fannie and Freddie continue to charge (and raise) fees for the loans they purchase and securitize.

You would think in light of better loan quality and lower defaults they could ease some of these loan-level fees, but that has yet to be the case.

And these groups believe it’s gotten so bad that some qualified borrowers are being “priced away” from conforming loans and ostensibly into cheaper government loans such as FHA.

The issue is especially touchy seeing that these LLPAs generate enormous profits for Fannie and Freddie, which are under government conservatorship and shouldn’t really be raking it in.

Their implied goal should be to promote homeownership and ease credit for a large swath of borrowers, at least, that’s the theory.

And thanks to strong mortgage underwriting, enhanced mortgage insurance capital requirements, and improved reps and warranty framework, Fannie and Freddie should be comfortable enough to adjust their pricing policies.

But Would This Invite More Risk?

The counterargument here is that risk-based pricing is a necessary evil in the mortgage space (and elsewhere) that reflects borrower quality. After all, a mortgage borrower with a 620 credit score probably has a higher chance of default than a borrower with an 820 credit score.

Same goes for down payment size – the borrower who puts down 40% is likely less risky than the borrower putting down 10%. And interest rates have to account for that.

Sure, you could offer everyone the same rate and thus lower monthly mortgage payments for the riskier band of borrowers, which could effectively lower default rates.

But it could usher in new risk if borrowers are given ultra-low interest rates despite exhibiting high-risk borrowing attributes.

It could also promote hazardous lending because there wouldn’t be any downside to putting next to nothing down, or for maintaining poor credit.

At the same time, there wouldn’t be any upside for borrowers to be more conservative in their borrowing habits. They could essentially buy more home if they put less down and make speculative investments with greater ease.

Not to mention that interest rates are already close to new record lows, so arguing to lower them even more at the moment might seem a bit ill-timed. Perhaps they could lower LLPAs to align with today’s risk, but eliminating them entirely seems shortsighted and dangerous.

Source: thetruthaboutmortgage.com

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30-year fixed mortgage rates declined slightly last week, the first rate drop in three weeks, but it wasn’t enough to boost mortgage demand.

Mortgage applications fell last week by 1.2% on a seasonally adjusted basis compared to one week earlier, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. 

The 30-year fixed rate decreased five basis points to 6.5% last week, which is still 114 basis points higher than a year ago, Joel Kan, MBA’s vice president and deputy chief economist, said. 

According to the survey, the seasonally adjusted purchase index decreased 2% from one week earlier. The refinance index, on the other hand, increased 1% from the previous week — but was down by 51% from the same week one year ago.

The Federal Housing Administration (FHA) share of total applications decreased to 12.5% last week from 12.6% the week prior. The U.S. Department of Veterans Affairs (VA) share, however, rose to 11.3% from 11.2% one week prior. The U.S. Department of Agriculture (USDA) share also climbed marginally to 0.5%, up from 0.4% the previous week. 

The MBA survey shows the average interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 6.50% last week from 6.55% the prior week. Rates on jumbo loans (greater than $726,200) decreased to 6.37% from 6.40% on a weekly basis.

“The jumbo-conforming spread continues to narrow, an indication that there is reduced lender appetite for jumbo loans following the recent turmoil in the banking sector and heightened concerns about liquidity. The spread was 13 basis points last week, after being as wide as 64 basis points in November 2022,” Kan said.

Following JPMorgan Chase Bank ‘s acquisition of First Republic Bank, there are expectations that the existing hole in jumbo lending will widen, Jamie Dimon, the CEO of JPMorgan, indicated in a call with analysts on Monday. 

“Making very large cheap mortgage loans will not happen going forward,” he said, noting that Chase won’t be following First Republic’s jumbo-lending model. 

Despite the First Republic Bank failure, which resulted in the second-largest bank failure in US history, the Federal Reserve is still expected to raise rates by 25 basis points on Wednesday. An additional quarter-percentage point increase would lift the benchmark federal funds rate to 5 to 5.25% — a 16-year high.

Source: housingwire.com

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Washington, DC
CNN
 — 

Mortgage rates rose this week, after five weeks of falling.

The 30-year fixed-rate mortgage averaged 6.39% in the week ending April 20, up from 6.27% the week before, according to data from Freddie Mac released Thursday. A year ago, the 30-year fixed-rate was 5.11%.

“For the first time in over a month, mortgage rates moved up due to shifting market expectations,” said Sam Khater, Freddie Mac’s chief economist.

“Home prices have stabilized somewhat, but with supply tight and rates stuck above 6%, affordable housing continues to be a serious issue for many potential homebuyers,” he said. “Unless rates drop into the mid-5% range, demand will only modestly recover.”

Mortgage rates went higher than 5% for the first time since 2011 a year ago, and have remained over 5% for all but one week during the past year. Since then they have gone as high as 7.08%, last reached in November, and had been trending down since early March.

The average mortgage rate is based on mortgage applications that Freddie Mac receives from thousands of lenders across the country. The survey includes only borrowers who put 20% down and have excellent credit.

Rates climbed up this week as 10-year Treasury yields climbed higher. As investors responded to economic indicators, bond yields ticked higher, taking mortgage rates with them.

“Mortgage rates are the product of the larger economic environment, including inflation and employment data as well as banking stability and the Federal Reserve’s actions,” said Hannah Jones, economic data analyst at Realtor.com. “Recent data points to a still-resilient, though cooling economy, leading many to believe the Fed will elect to raise the target rate at next month’s meeting.”

The Fed does not set the interest rates that borrowers pay on mortgages directly, but its actions influence them. Mortgage rates tend to track the yield on 10-year US Treasury bonds, which move based on a combination of anticipation about the Fed’s actions, what the Fed actually does and investors’ reactions. When Treasury yields go up, so do mortgage rates; when they go down, mortgage rates tend to follow.

Home buyers remain very sensitive to weekly changes in mortgage rates.

“Last week’s jump in mortgage rates led to a pullback in mortgage applications, as homebuyers remain sensitive to rate movements,” said Bob Broeksmit, CEO of the Mortgage Bankers Association. “The lack of housing inventory this spring buying season is also keeping many prospective buyers on the sidelines.”

While MBA expects mortgage rates to fall to around 5.5% by the end of this year, more housing supply is needed to improve affordability and meet demand, he said.

Last year’s persistent mortgage rate climb, combined with inflation and home price growth, led many buyers to retreat from the housing market, said Jones.

“While spring is typically a season marked by a lively housing market, this year is proving to be less energetic than previous ones,” she said.

Nevertheless, Jones added, buyer demand shows signs of improvement with each gain in affordability.

As a result, she said, “housing demand remains largely stifled as many buyers wait on the sidelines until the cost of purchasing a home becomes more doable.”

Source: cnn.com