Homebuyers return as Fed easing spurs surge in mortgage-rate locks
Monetary easing by the Federal Reserve has led to a 68% surge in mortgage-rate locks, indicating a return of homebuyers, according to Redfin. Mortgage purchase applications rose over 10% month-over-month, suggesting potential increases in home sales. The Homebuyer Demand Index reached its highest level since May. Contributing factors include lower housing payments and more listings. Despite mortgage rates not falling significantly post-rate cut, buyers are now more serious about purchasing homes. Freddie Mac reported long-term mortgage rates at a two-year low.
Monetary easing by the Federal Reserve has sparked a rush among previously hesitant homebuyers, driving a 68% surge in mortgage-rate locks from a month earlier on Sept. 23, online real estate brokerage Redfin (RDFN) said in a Thursday report.
If that's not enough to suggest that demand is improving, mortgage purchase applications have climbed over 10% M/M, potentially leading to higher home sales over the next few weeks, according to the report, which analyzed mortgage rate-lock data from Optimal Blue.
Also, Redfin's (RDFN) Homebuyer Demand Index–a gauge of tours and other buying services from Redfin agents–jumped to its highest level since May during the week ending Sept. 22. Other factors that have been bringing buyers back include lower median monthly housing payments and increased new listings.
Do note, though, that mortgage rates and housing costs have been falling markedly for several weeks before the Fed embarked on its first rate-cutting cycle in four years last week. "Many house hunters had been waiting for the rate cut to actually happen to get serious about buying, and now they have, even though mortgage rates didn’t fall further after the rate cut than they had in the week leading up to it," the report said.
Earlier on Thursday, a Freddie Mac survey showed that long-term mortgage rates fell to the lowest level in two years.
Mortgage lenders: Rocket Companies (RKT), UWM Holdings (UWM), PennyMac Financial Services (PFSI), LoanDepot (LDI), Finance of America Companies (FOA).
Mortgage REITs: Annaly Capital Management (NLY), AGNC Investment (AGNC), Chimera Investment (CIM), Two Harbors Investment (TWO), Orchid Island Capital (ORC), New York Mortgage Trust (NYMT), Invesco Mortgage Capital (IVR), Dynex Capital (DX).
Real estate brokerages: Re/Max Holdings (RMAX), Zillow Group (Z) (ZG), Compass (COMP), Opendoor Technologies (OPEN), Redfin (RDFN).