Fierce bidding wars for homes in the nation’s capital are slashing applications from borrowers interested in taking out a purchase mortgage, an industry group said Wednesday.
Around the country, rising mortgage rates over the past year have cut applications for loans to buy a home, with the latest weekly reading on a U.S. gauge from the Mortgage Bankers Association showing a 5% drop from the prior week (as seen in the chart). But in hot markets like Washington, where there’s a low supply of homesavailable for sale and borrowers haven’t been put off by pricier loans, would-be mortgage applicants are still giving up on borrowing.
“Some lenders continue to report that they have pre-approved borrowers who have been unable to find a property given the tight inventory in certain markets,” said Mike Fratantoni, MBA’s chief economist.
Just how hot is D.C.’s market? More than one-quarter of homes sold in May closed above their list price, according to Redfin, a real estate firm. But that statistic pales in comparison to the scorching markets in San Jose and San Francisco, where almost 70% of homes sold above their asking price.
Elsewhere in the country, rising rates are taking a toll on loan applications from borrowers who have become priced out of the market. Plus, borrowers still face the extremely high standards that lenders erected in the wake of the financial crisis.
Source: WSJ