Mortgage News Updates: As Mortgage Demand Fall, Lenders are Eager to Make Home Loans

Even though mortgage interest rates remain low, the demand for home financing has dropped.

According to a report published during the last week of August in Realtor Magazine, fewer people are submitting applications for new mortgages or refinancing their existing home loan. Since the current interest rates for mortgages are low, what accounts for this drop in demand? Should you be concerned about applying for a mortgage in this environment?

Three Reasons for the Drop in Mortgage Demand

According to the government mortgage guarantor Freddie Mac, the three explanations that account for the lower demand for home loans include the following:

• The number of homeowners looking to refinance their home loans decrease 60 percent in 2013-2014. Experts forecast demand to drop another 50 percent this year since it is likely that interest rates will start to increase.

• During the first quarter of 2014, the number of home sales took a hit due to the severe winter weather, contraction in economic growth, and a spike in mortgage interest rates.

• Many home buyers, especially investors, are opting to pay cash for homes due to the low prices of distressed properties, such as foreclosures and short sales. As the inventory of these low cost homes decrease, the demand for home mortgages will increase.

Since lenders need to make mortgages to generate revenue, the low demand for loans has led to some mortgage bankers to become more flexible with their terms. To review your financial situation to determine if this a good time to apply for a mortgage, contact a mortgage expert today.