Mortgage Demand Down As Buyers Remain On Strike

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Mortgage Demand Down As Buyers Remain On Strike

Michael Carbonare
Investor ยท Fort Lauderdale, FL ยท Member since 2013 ยท 919 posts ยท 607 votes

M๐จ๐ซ๐ญ๐ ๐š๐ ๐ž ๐๐ž๐ฆ๐š๐ง๐ ๐ญ๐จ ๐›๐ฎ๐ฒ ๐ก๐จ๐ฎ๐ฌ๐ž๐ฌ ๐ฃ๐ฎ๐ฌ๐ญ ๐ฉ๐ฅ๐ฎ๐ฆ๐ฆ๐ž๐ญ๐ž๐ ๐ญ๐จ ๐ข๐ญ๐ฌ ๐ฅ๐จ๐ฐ๐ž๐ฌ๐ญ ๐ฅ๐ž๐ฏ๐ž๐ฅ ๐ข๐ง ๐Ÿ๐ŸŽ ๐ฆ๐จ๐ง๐ญ๐ก๐ฌ ๐š๐ฌ ๐ญ๐ก๐ž ๐›๐ฎ๐ฒ๐ž๐ซ'๐ฌ ๐ฌ๐ญ๐ซ๐ข๐ค๐ž ๐œ๐จ๐ง๐ญ๐ข๐ง๐ฎ๐ž๐ฌ.
The MBA mortgage purchase index is now at 150.
57% crash from pandemic peak.
40% drop from 2018-2019 levels.

๐‘‡โ„Ž๐‘’ ๐บ๐‘Ÿ๐‘’๐‘Ž๐‘ก ๐‘…๐‘’๐‘๐‘œ๐‘ฃ๐‘’๐‘Ÿ๐‘ฆ ๐‘œ๐‘“ 2026 is not happening.  In fact, this could be the worst year for sales if current trends continue at this pace.

And its not just mortgage applications.  It's also home tours.  Data from ShowingTime, a Zillow-owned home tour scheduling app, is showing the worst start to a year in 5 years for touring volume in 2026.  Mortgage applications and home tours are leading indicators of demand.

Most concerning about the continuing plummeting demand is that it's happening alongside interest rate cuts and declining mortgage rates. Fed has cut rates 7 times since August 2024.  Yet demand keeps falling.  It ain't rates.
Leading me to say once again, in my best James Carville voice,  "It's the price, stupid".

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Theresa HarrisPro Member
Member since 2019 ยท 15k+ posts ยท 11k+ votes
7mo

We're two months into the year.  You also have to think about interest rates and what people incorrectly think is normal (2.5% interest is not normal).  Where I live, entry level houses are still selling quickly.  Ones that are higher end are taking a bit longer to sell.  Where I have some of my rentals (another province), prices there are down a bit along with sales.

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  • Theresa HarrisPro Member
    Member since 2019 ยท 15k+ posts ยท 11k+ votes
    7mo

    We're two months into the year.  You also have to think about interest rates and what people incorrectly think is normal (2.5% interest is not normal).  Where I live, entry level houses are still selling quickly.  Ones that are higher end are taking a bit longer to sell.  Where I have some of my rentals (another province), prices there are down a bit along with sales.

    3Reply
  • Kenneth GarrettPro Member
    Investor ยท Florida Panhandle/Illinois ยท Member since 2016 ยท 4k+ posts ยท 3k+ votes
    7mo

    Affordability is the issue. Housing prices rose to historic levels since the pandemic. Sellers were use to multiple offers and buyers paying way over asking price. Those who bought with interest rates of 3% and under are stalling things as well. I totally understand that as I am one of them. Iโ€™m not giving up that rate.

    Itโ€™s such a double edge sword. Lowering interest rates to 5% or less will cause home prices to escalate. I know there is a balance somewhere in there. I believe rates close to 5% will stir more sellers and buyers. As with all things, it is market driven. Although national numbers are useful, it really comes down your individual market.

    Time will tell especially as spring starts and winter ends how things in the real estate market will go.

    1Reply
  • Janice Carter
    Real Estate Broker ยท Atlanta ยท Member since 2024 ยท 1k+ posts ยท 606 votes
    7mo

    Demand is definitely soft. Applications and showing activity are leading indicators, so that data matters. That said, real estate is hyper local. In some markets, affordability pressure is the issue. In others, it is inventory mix, insurance costs or buyer psychology. Rate cuts donโ€™t instantly translate into confidence. Prices correct when sellers are forced to meet the market. Until then, we are in a standoff.

    1Reply
  • Quinn OlivarezBusiness Member
    Real Estate Agent ยท Houston, TX ยท Member since 2021 ยท 115 posts ยท 131 votes
    7mo

    Pending home sales have been growing YoY, and purchase application data is up. Price cuts are declining. Rates are declining. Inflation is not good but not terrible either, and many of the young professionals who were in school during the pandemic have graduated and are looking for homes in markets with strong inbound migration trends. 

    [email protected]832-607-2941
    Quinn Olivarez @ J. Lindsey Properties57 Reviews
    WebsiteView Page
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  • Ryan ThomsonBusiness Member
    Real Estate Agent ยท Colorado Springs, CO ยท Member since 2018 ยท 1k+ posts ยท 1k+ votes
    7mo

    The demand problem and the supply problem are the same problem: nobody with a 3% rate wants to sell, and nobody without one can afford to buy.

    There is a way around it. VA and FHA loans from 2019-2022 are legally assumable. The buyer qualifies directly with the seller's servicer and takes over the original rate. On a $400K loan balance at 2.75% vs. 6.25%, that's $847/month less. $305K in savings over 30 years.

    I've closed 7+ of these in one quarter in Colorado. The inventory is real. In Colorado Springs alone, 1,100+ assumable listings right now.

    The process takes 45-90 days and requires an assumption processor to push it through. Banks add friction on purpose -- they'd rather repackage that money at 6.25%. But VA sent a circular reminding servicers they have to allow it or lose their ability to service VA loans.

    For buyers stuck on the sidelines because nothing pencils at current rates, assumptions are often the only deal that works. For sellers with a 2.75% rate, it's a real marketing advantage in a slow market. Most agents on both sides don't know how to run one.

    Has anyone here actually closed an assumption transaction? Curious how your servicer handled the process.

    The Assumable Guy544 Reviews
    WebsiteView Page
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