Rates rose again past week through September 6th, and mortgage applications plummeted to the lowest levels seen since June 2009. Refinancing represented 57% of total applications, way off its peak of 71% during the week of May 3. Purchase applications did not pick up the slack, and the Housing recovery is beginning to show the effects of higher interest rates. Interest rates directly affect a buyer's "purchase power." Prior to May 3rd, rates hovered around 3.75% (best execution rate) and with $200,000 sales price your PI payment would be $926. With today's rates a prospective buyer who wanted to keep the same PI payment would be looking at $175,000 sales price. Along with low property inventories on the market, this impedes a prospective buyers ability to find the "right fit." Investors still make up over 30% of buyers and they are able to outbid with all cash offers and limiting a buyer's options even further.
