Last month was rough for the US home and mortgage market. As we mentioned at the time, sales dropped precipitously following the expiry of a government stimulus program meant to spur sales. Apparently it did spur sales because when it was over, it was over.
However, it looks like there’s a bit of good news for our neighbours this week. According to the Mortgage Bankers’ Association (who conduct a survey on 50% of all mortgages each week), the application for new mortgages in the US rose by 7% last week (over the previous week). Consumers are thought to be lured into the market because of the record low mortgage rates. The bump is relatively big-the last time there was that big of an increase was over a year ago.
Michael Frantantoni, in a press release, says, “Mortgage rates remained near record lows last week, as incoming data on job and housing markets were weaker than anticipated. As more homeowners locked in to these low rates, the level of refinancing applications increased to a new 13-month high.” But this doesn’t seem to be translating at all to sales of properties: “For the month of June, purchase applications declined almost 15 percent relative to the prior month, and were down more than 30 percent compared to April, the last month in which buyers were eligible for the tax credit.”
In the US, the average interest rate on a 30 year fixed rate mortgage is currently 4.67%.
Of course, the US market is considerably weaker than the Canadian one. However, as Bank of Canada observed in its report on the increasing optimism on the Canadian economy, a continually expanding economy is dependent in large part on the strength of the larger global economy. So here’s hoping the US housing market will stabilize again as soon as possible.
