Mortgage Rates Climb but Home Purchases Continue to Increase

29. March 2021.

Mortgage applications continue to grow with a 3% increase week over week as the market continues its month long winning streak.

The figures outpace last year by more than 25% and will continue to rise due to comparisons against the height of the panic in the coming weeks. Households continue to seek more living space, and first time home buyer demand is higher than it has been in a decade, both positive effects on the housing market from the pandemic, particularly in major suburban areas of the country.

Since much of the United States market has had relatively slow growth in recent history, the spike in prices is a welcome sign to homeowners in the market. However, as interest rates increase affordability could be a concern in the near future, say some analysts.

Fixed rate mortgages increased from 3.28% to 3.36% last week, which is expected to steadily continue in accordance with Treasury yields. The trend started several months ago, which has led to a major decrease in refinancing. The majority of lending applications come from the refinancing market.

The rental market for landlords has been negatively impacted by the federal ban on evictions, with smaller landlords looking to sell properties. Relief bills seem to target renters first and foremost rather than the owners. Landlords cannot directly request relief in many markets. The tenant must file on behalf of the landlord to show that he/she cannot afford to pay rent in some key markets.

The CDC recently extended the ban for another quarter, ending in July. Smaller landlords without access to emergency funding will continue to be forced to sell. The unintended consequence may be stricter tenant applications, and a less appealing market for multi-family homes.

Analysts are concerned that the net outcome will be a more difficult rental market for low rent housing, the very people the eviction ban is looking to help.

Marilyn Blackburn, a landlord in Washington state for 20 years, has decided to sell her nine rental properties as soon as she can.

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