Mortgage demand in the US has fallen to its lowest level in 27 years, despite interest rates falling to near all-time lows across the country.
Data from the Mortgage Bankers Association (MBA) showed that new mortgage applications fell more than 9% compared to last year for the week ending August 6th. This marks the lowest level for the metric since 1992.
The drop in activity comes despite mortgage rates falling to their lowest levels ever in July, with the average rate for a 30-year fixed rate mortgage dropping to a record 3.04%.
Analysts have suggested that the weak demand is likely due to borrowers’ current concerns over the economy, job security, and their own personal finances in light of the Covid-19 pandemic. The lockdown restrictions imposed on many states to contain the virus have caused a significant economic downturn, which has put a strain on all areas of the housing market.
Regulators have taken steps to try and stimulate mortgage demand, with the Federal Reserve lowering the federal funds rate to a range of 0-0.25%. This in turn has pushed lenders to discount their mortgage rates in order to make them more attractive to potential homebuyers.
Despite these efforts, it remains to be seen if they will be enough to reignite the housing market and boost demand.