(PatriotWise.com) — As borrowing costs ease, mortgage applications have risen, according to Fox News. On a seasonally adjusted basis, applications increased by 7.2 percent, as reported by the Mortgage Bankers Association’s Market Composite Index. Applications were up 16.6 percent in May and 8 percent greater in April.
The month of May reportedly saw a surge in housing since 2016. Residential construction of new homes implies a trend to kickstart economic growth as the U.S. sees four consecutive months of year-over-year mortgage application increases.
Despite this optimism, however, Pantheon Macroeconomics’ chief economist Ian Shepherdson is saying that the housing market cannot grow as long as mortgage rates stay elevated, according to Business Insider. He said that he is stunned that the narrative is that the market is recovering just because of slightly lowered rates. His comment comes as the average 30-year-fixed mortgage rate fell 6 points to 7 percent.
The 15-year mortgage rate is also down 4 basis points over the last week. But Pantheon suspects that the housing market will not fully recover until housing is made more affordable. Mortgage rates are still at a 20-year high and analysts are anticipating rates to stay there through the rest of the year. Shepherdson continued to say that the recovery is not even beginning but that the decrease is marked by a shift from collapsing sales and demand to falling housing-related spending.
The drops came as the Federal Reserve halted its interest rate increases after doing so in 10 consecutive meetings from 2022 to 2023. This has generated some disagreement with housing analysts over what this could mean. Some are asking whether the Fed is done trying to curb inflation or if this is a temporary pause.
Lisa Sturtevant, chief economist at Bright MLS, thinks that the Fed’s 2 percent inflationary goal suggests rate increases will continue. She said that the increases could resume as soon as next month.
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