by Maurie Backman | Published on Sept. 15, 2021
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More applicants sought out home loans last week. Should you do the same?
Anyone who's familiar with the housing market can tell you that spring and summer are usually the peak times to buy a home, and things tend to slow down a bit as fall approaches. But last week, mortgage applications soared, despite the fact that interest rates didn't drop drastically.
In fact, last week's mortgage application numbers were 7% higher than they were the previous week, according to the Mortgage Bankers Association. And they reached the highest level since April.
Why the uptick in mortgage activity? It could boil down to one thing.
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Buyers have struggled to purchase homes this year because of a glaring lack of inventory. Many sellers have held off on listing their homes, hoping to wait out the pandemic. Because there have been so few properties to buy, home prices have soared. And that, combined with limited choices, may have driven buyers away earlier in the summer.
But until last week, the number of new listings to hit the residential real estate market rose for nine straight weeks, according to Realtor.com. And that may have led to an increase in mortgage activity.
Home buyers are still grappling with sky-high prices -- so much so that the average loan size for a purchase mortgage just rose to $396,800. But the fact that more inventory has been added has no doubt helped mortgage activity pick up.
While there may be more homes available to buy today than there were earlier in the year, the housing market as a whole is still lacking inventory, and home prices are still extremely inflated.
All of this makes the case for waiting to buy a home. Mortgage rates are very attractive today, which is why a lot of people don't want to wait to buy. But rates are also likely to stay low well into 2022, and possibly beyond. If you wait things out a bit until more homes hit the market, two things could happen:
Another thing to keep in mind is that sellers are often hesitant to list their homes during the winter. It's harder to show off a home's curb appeal in the colder months, and viewings and open houses are subject to postponements due to weather.
This means that housing inventory may not open up much right away. But during the first part of 2022, we could see a lot more properties hit the market. If you can hold out until then, you may snag a better deal on a home. Waiting to buy will also give you time to save more for a down payment. And that could give you more flexibility on the type of home you can afford.
Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.
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