Mortgage Applications Fall as Rates Rise. Inventory Remains Low.

Mortgage applications for home purchases and refinancing continued to fall, dropping 11.5 percent last week, amid rising mortgage rates. Interest rates rose above 4 percent for the first time in a year, according to the Mortgage Bankers Association. 

Applications for refinancing saw the largest declines, with applications falling 15 percent last week, the MBA reports. Meanwhile, applications for home purchases, an indicator for future home sales, fell 1.6 percent last week. 

Many analysts blame the decreasing applications on rising mortgage rates. The fixed 30-year mortgage rate averaged 4.07 percent for the week ending May 31, its highest level since April 2012, the MBA reports. Fed chairman Ben Bernanke recently indicated that the Fed may soon scale back its bond purchase program, which has helped to keep mortgage rates near all-time record lows.

Another factor reducing mortgage applications is the lack of inventory. Many of the sales in Morris County are first time home buyers. These people  who typically purchase a home in the $300,000 range are finding little to choose from, so they are continuing their search. I have personally see multiple offers received on properties listed less then a week. The offers are usually full price or above. 

Young couples are hesitant to get into a bidding war, so rather the be outbid, the best alternative is go with a full price offer at the onset. When the seller receives their asking price, they are usually hesitant to accept other offers for fear of upsetting the buyers. 

In conclusion, prices are rising and we are in fast market conditions. Homes with updated kitchens and baths are the homes which are selling in days as compared to weeks or months over the past 5 years. If you are thinking of selling your home, then now is the time to list before the rates have a negative affect on the housing market.