July 22, 2022 · less than 3 min read
High interest rates and rising inflation mean demand has dropped to a 22-year low.
We’ve said it before, and we’ll say it again: We’re in the bad times. The current economic downturn, sparked by pumped-up interest rates and a hefty spike in inflation, is dealing a serious blow to the housing market. With much of the population tightening their belts, mortgage demand has plummeted to figures that haven’t been seen since we were all celebrating the dawn of a new millennium.
Last week, applications for a mortgage to purchase a home dropped by 7%, sitting at 19% lower than the same week in 2021. House prices have been exploding, and now, with rates double what they were in January, buyers aren’t packing much of a punch.
Big picture, big problems
Obviously, house buying behavior isn’t impacted by weekly moves in interest rates. But the bigger picture shows a more inherent problem. The economic outlook is weak, and with little buying power, purchase activity is currently in decline with little sign of revival.
What do the latest mortgage moves mean for you? Of course, like many people, you may be battening down the hatches. And this could be sensible, with The Federal Reserve expected to push mortgage interest rates even higher – by another 75 basis points – next week. Things are far from steady, so your best bet is to wait and see what sort of fallout there is once the markets digest the Feds latest move. Volatile is the word of the day.
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