Mortgage Rate Inertia: Even Wars and Economic Jitters Can't Budge the Needle!

The Matrix is Real...and It's Holding Mortgage Rates Hostage

Well folks it seems like we're stuck in a real life version of 'Groundhog Day,' except instead of Bill Murray reliving the same day it's mortgage rates refusing to budge. Economic uncertainty at home military conflicts overseas – you name it the market yawns. I remember when I was building Microsoft a little competition would get us moving! Now even global events can't seem to shake these rates loose. Last week the average 30 year fixed rate mortgage inched up to 6.88%. At this point I'm half expecting Clippy to pop up and ask if I need help understanding why nothing's happening.

Joel Kan and the Mystery of the Unmoved Market

According to Joel Kan at the MBA the combination of the Middle East situation the economy and the FOMC meeting resulted in slightly lower Treasury rates on average but mortgages still crept higher but remaining stagnant. It's like trying to debug a program with an intermittent error – frustrating! You know back in my day we'd just throw more programmers at the problem. Maybe we need to throw more economists at this mortgage rate mystery. Speaking of throwing programmers who wants to come over and play Minesweeper?

Homebuyers: Still Waiting…and Waiting…and Waiting…

These rates have been bouncing around just below 7% since April. The problem? Homebuyers are still facing inflated house prices and a severe shortage of options. It's a classic 'Catch 22.' As I always say 'Success is a lousy teacher. It seduces smart people into thinking they can't lose.' But in this market people are definitely feeling like they're losing. Except that nothing is moving... how can you lose? The applications for mortgages to buy a home dropped 0.4% last week. I feel their pain – waiting is the pits. You know what they say patience is a virtue... but sometimes you just want to Ctrl+Alt+Delete the whole process.

Loan Sizes Shrinking: Is This the New Normal?

Kan also noted that the average loan size for purchase applications declined to $436,300 the lowest level since January 2023. It's all driven by decreasing conventional purchase loan sizes. Makes you wonder if people are just buying smaller houses or perhaps tiny houses are making a comeback? I mean I admire the minimalist lifestyle but I'm not sure I could fit all my books into a tiny house.

Refinance Resurgence: A Glimmer of Hope?

Here’s a sliver of good news: Applications to refinance a home loan rose 3% for the week. Who can resist a good bargain? The average rate on the 30 year fixed last year at this time was only slightly higher so many would jump at the opportunity. I always say "We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten." Maybe in ten years we'll all be refinancing our Martian condos at 0%.

Low Volume Big Swings: The Math Is Tricky

Volumes are so low that even small changes make for big percentage moves. It's like trying to steer a rowboat in the ocean – every little ripple feels like a tsunami. The market needs some real momentum some innovation. Maybe we need to create a 'Windows' for mortgages – user friendly reliable and hopefully bug free. I believe in innovation! Now back to philanthropy...