The Mortgage Bankers Association (MBA) has revealed that mortgage applications have dropped by 1.2 percent. This follows a five-week period where rates for home loans have trended higher, affecting the attraction for residential property.
Joel Kan, an economist at the MBA, said that there has been good growth in GDP and rising wages over the past few weeks. "This raises the likelihood of the Fed raising rates at its December meeting," he said, "But also indicates stronger domestic economic fundamentals, which pushes rates higher."
In the latest rate changes, levels rose to their highest since June, moving from 3.75 to 3.77 percent for a 30-year fixed home loan of $417,000 or less. Seasonally adjusted levels, to remove bias, saw mortgage applications and refinance applications drop. These loans, which are extremely sensitive to rate changes, dropped by 3 percent. Kan explained that, despite these downturns, home purchase movements in 2016 have improved overall from 2015.
A recent monthly sentiment report by Fannie Mae showed that more consumers believe that the time is right to sell and buy homes. However, fewer people believe that their jobs are safe for the foreseeable future. Also, fewer think that mortgage rates will fall rather than continue their current upwards trend. Fannie Mae chief economist and senior vice president Doug Duncan noted that this doubt over job security may be down to Americans' uncertainty over the future, following the recent election.