It’s probably too early to get excited, but several lenders reported that mortgage demand climbed to 2022 levels this week.
After months of hovering in the high 6% range—and most recently dipping to 6.84%— declining mortgage rates may finally be luring buyers back. Applications rose 11% last week, according to the Mortgage Bankers Association (MBA), as mortgage executives report renewed activity in the market. And several say it will be even stronger when this week’s stats are tallied by the MBA.
Patty Arvielo, co-founder and co-CEO of New American Funding (NAF), told HousingWire that Tuesday was NAF’s best day for mortgage applications since 2022.
“I think the last few years have paid off for us. First off, we grew 60% last year,” Arvielo said. “So I think the consolidation of loan originators is part of it. I think the move-up buyer is driving the market, meaning a former first-time home buyer [who] now has a significant amount of equity.”
Arvielo says that 74% of the applications submitted this week to NAF were purchase applications.
“I think people have been sitting on the sidelines waiting for these big rate drops we thought were going to happen…but that tiny 6.8% interest rate, well, it’s better than the sevens.”
Arvielo imagines this leading to a bustling refi market. “I think the refinance market is gonna continue to increase, because you’ve got people paying high credit card debt. We have more card loan debt than we’ve had in many, many years. So people are using their equity to consolidate,” she said.
Florida-based Jay Promisco, president at Sierra Pacific Mortgage, attributes the applications uptick to the state experiencing a high level of sales price reductions. “It’s becoming a buyer’s market here, and that’s kind of transpired ever since the kind of hurricane action in September,” he said.
Promisco agrees with Arvielo that after three years of interest rates at this level, the consumer has finally decided that now is not a bad time to buy. However, he said that certain regional markets are skewing the numbers.
Joseph Panebianco, CEO and president of AnnieMac Home Mortgage, says the company has seen a 17% increase year over year in application activity. In tandem, the company is growing its recruiting and sales efforts.
“We’re in a process where rates have come down from their high, which is always very helpful. I think people realize that what was potentially going to be a booming economy has sort of muddied, I’d say, by tariffs. So to make a long story short, interest rates are more accommodating now than they were just a year ago,” he said.
Panebianco continued, “The housing market has had more time for real incomes to increase…There are still some tight markets, but I think [we’re] seeing more inventory than we’ve been we’ve seen. Employment across the economy is still very robust; rumors of the demise of the U.S. economy have not yet come to fruition.”
Concerns about future and first-time homebuyers
While Arvielo is encouraged by the return of buyers to the market and their confidence in submitting applications, she expressed concern for first-time homebuyers — particularly regarding how they are interpreting media coverage of the market and managing financial obligations like student loan debt.
“The first-time buyer is a bit more impacted by inflation than the move-up buyer,” she said. “I’m a bit concerned about what we’re going to do with our first-time homebuyers, because we need that market for the long term to continue to build generational wealth for those who have been sitting on the sidelines…we’ve also had some some cuts in employment, so that that doesn’t make me feel good.”
Panebianco has a similar sentiment. “You have five or six Ds of real estate: diapers, diamonds, diplomas, divorce, death. And I always say the sixth, of course, which is becoming more prevalent, is debt,” he said.
However, Panebianco says that AnnieMac’s percentage of first-time buyers is up. “We generally see about 25% to 30% of folks who are first-time homebuyers. We’ve gotten a larger share; we’re at 48% just recently,” he shared. “I will say that more and more first-time homebuyers are doubling up with each other, whether that be with their significant others or their friends. The dual-income, college-educated folks can much more easily qualify for a home.”
He continued, “Life happens, not just to their incomes, their real inflation-adjusted incomes, but maybe they have children, maybe they graduated college, you know, maybe they were forced, because of student loan debts, to make a move. Maybe there was a death in the family, maybe there was a divorce. So, like I said, as life continues to happen, at some point you just have to make a move.”
First Time Home Buyer FAQs - Via HousingWire.com
