Main Content

Housing Market Continues to Cool Based on Mortgage Industry

The Real Deal

Everything Real Estate in the San Fernando Valley
Friday May 21, 2021
Housing Market Continues to Cool Based on Mortgage Industry

It appears that the housing market is cooling down (not crashing) across the board; the latest indicator is that the demand for mortgages, specifically refinancing mortgages, hit its lowest level in a year during April 2021. More specifically. “cash-out refinancing” dropped 13% between March 2021 and April 2021, and “rate-and-term refinancing dropped 20 percent during the same time period. This is true despite the fact that roughly 14.5M homeowners could refinance for a better deal today.

A direct result of the reduced interest in refinance is that purchased loans represent a larger slice of the market; up to 55% in April 2021 from 52% in March 2021. Another factor is the belief that the era of record low mortgages is coming to an end; 30-year fixed-rate mortgages are expected to reach 3.4% by the end of 2021, and 3.6% by the end of 2022 (it was 3.1% last year). Add to the fact that lenders have been tightening their standards in response to the droves of people applying for loans or refinancing in the red-hot housing market (the lowest rate of issuing mortgages since 2014), and you can see why analysts believe the market is cooling down.

It is important to understand that a “cool down” is different from a “crash.” In the first place, a “cooldown” doesn’t suggest a decrease in value, it simply says the rate of growth is decreasing, whereas a crash means property is losing value. Second, a cool down doesn’t wipe out people’s savings, whereas a crash does. This cooldown is not a cause for alarm and is a normal part of the economic cycle.

At the Chernov Team we understand that knowledge is power, and knowledge of how the market is behaving is powerful knowledge indeed. At the Chernov Team w know that whoever comes to the table most prepared leaves with the most.


Stay Connected

Sign up to Access:

Exclusive private listings S.F. Valley market insights VIP events

Thanks for signing up!
By signing up you agree to our Terms & Conditions

More Blog Posts

To Love
Wednesday June 9, 2021

Southern California, which consists of 6 counties, saw a 20.2% increase in median home prices between April 2020 an...

Read Full Post
Wednesday June 2, 2021

The supply of homes in California is at a record-low level, something we have mentioned consistently over the past ...

Read Full Post
Friday May 28, 2021

According to the National Association of Realtors (“NAR”), pending home sales in April 2021 were down 4.4% from...

Read Full Post