There’s a “ray of hope” for the U.S. housing market, said Barbara Corcoran, founder of residential brokerage the Corcoran Group and ABC Shark Tank judge.
Mortgage applications jumped 12% last week, according to the Mortgage Bankers Association’s analysis for the week ending April 24. Corcoran noted that the trend is led by states that are planning to loosen coronavirus lockdown restrictions, such as California, Washington and New York.
“It is very hopeful,” Corcoran told Yahoo Finance. “I would not call it a turning of the corner [though]. I think we have a little bit more work before that happens.”
Experts predict that mortgage applications will continue to rise, as 30-year fixed rate mortgage rates dipped to an all-time low of 3.23% last week, according to Freddie Mac. But the market has a long recovery ahead: the 12% jump in mortgage applications this week from a week earlier is still a 20% loss year-over-year, according to the MBA.
“That [a purchase application] is usually the warm-up act that every buyer has before they go out into the market and start looking,” said Corcoran. “As brokers can anticipate showing homes, the customer at home decided, I better get pre-qualified.”
But many applicants may not be approved for mortgage applications. Banks have raised lending requirements, excluding many potential buyers and tempering optimism for the market. JPMorgan Chase, the country’s largest lender by assets, now requires a 700 credit rating and a down payment equal to 20% of the home’s value.
“This kind of waters down the whole idea that money is cheap. Because if you make it harder to reach, who cares if it’s a little bit cheaper?” said Corcoran.
Despite tight lending, rising mortgage applications indicate home buyer interest, signaling future recuperation in the market — but not until after the pandemic ends, she said.
“We’re not out of the woods until everybody has a means of being tested and there’s some medication to help us with the virus,” said Corcoran. “Until people feel comfortable for their own safety, of themselves and their family… I don’t think anything’s out of the woods.”
Sarah Paynter is a reporter at Yahoo Finance. Follow her on Twitter @sarahapaynter
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