Despite the global pandemic and the hit that the economy has taken over the last few months, mortgage applications in early October took an unexpected rise according to the Market Composite Index following the first week in October. After months of a declining market, a small spike in these applications drew attention to what exactly was on the rise. The changes for this spike in mortgage loans may even be related to the COVID-19 pandemic and the effect it is having on citizens everywhere.
Refinancing Mortgage Loans
Of these increased mortgage applications, many of them were refinancing applications and current mortgage lenders attempting to take advantage of lowering their home payments as a way to maintain their finances in the months ahead. With a reduced income and the potential for a reduced income in the foreseeable future, these homeowners decided to take advantage of an opportunity provided to them by their lenders.
This is also relative to homeowners who have steady jobs that survived the pandemic and are able to maintain some form of financial stability among the economic unrest happening across the country.
Lower Interest Rates
Many lenders in states across the country offered a refinancing option for current mortgages as a way to keep their accounts current and assist them with the economy. Lower interest rates in the housing industry through the summer appeared to have captured the interest of current homeowners and those in the market. This indicates that homeowners were looking to take advantage of these lower rates before they started to rise again. These interest rates have been some of the best that the housing industry has seen over the last decade.
VA Loan Applications
Part of the uptick in mortgage loans during early October is in part to VA loan applications. Because of the generous interest rate provided to members of the military, these VA loans offer a better option for first-time homebuyers or homebuyers in general who are looking to make a change. With these rates as some of the best in the industry right now, many of those who qualify for VA loans decided to take advantage of this offer just as those who took on refinancing their current mortgage.
Who Is Buying
Because the uptick happened in the VA loans and refinance applications, it seems as though these buyers are current or former home buyers looking to make moves in the housing market. There was a decrease in Early October for FHA loans, indicating that first-time homebuyers were stepping back due to the unpredictability of the economy.
The Shift in Loan Size
Because of the pandemic, the housing market has taken a shift in loan size across the market, with smaller loans being up more than larger homes and mortgage amounts financed. A lot of this has to do with families looking to downsize to more affordable homes and monthly expenses that parallel well with their current financial situation due to the pandemic. This means that larger homes are being listed, but smaller homes are selling quicker with more applications put in early on in October.
What Does This Mean For the Future?
These rising applications in the housing market indicate that there is still some interest left for citizens who want to make a move and want to take advantage of the right opportunity. While the uptick is rising, it represents the fact that the housing industry is still holding on and continuing to be successful despite the impact it suffered early on in the pandemic.
If you are in the market for a new property in Memphis or would like to speak to a real estate expert, give our team at Reedy and Company a call today. We look forward to assisting you with all of your real estate needs.