On average, borrowers will pay a fixed interest rate of 3.82% for a 30-year mortgage. Generally, when interest rates are low, home sales are high. However, there has been a curious lack of excitement among borrowers in California and throughout the country. According to the Mortgage Bankers Association, there was a drop in mortgage applications during the first week in June. Furthermore, the National Association of Realtors reported that pending home sales fell in April.
That was the 16th consecutive month in which that had happened. There are several reasons why the market may be sluggish in spite of lower interest rates. Buyers who are looking to move up may be discouraged by a lack of inventory as well as by prices that are still relatively high. The higher prices may offset any savings that a buyer could realize by paying a lower interest rate on a mortgage.
Buyers may also be reluctant to sell their homes and lose their current property and mortgage interest deductions. Changes to the tax code have reduced the mortgage interest deduction as well as placed a cap on state and local tax deductions. Since current homeowners don’t want to move, it has left fewer points of entry into the market for those who are looking for their first home.
Individuals who are looking to buy a residential property may want to do so with the help of a legal professional. Doing so may help to ensure that they are making offers that are in their best interests and are in line with prevailing market conditions. An attorney may also explain mortgage concepts to a buyer, which might make it easier to find a loan that a buyer can afford to repay both now and throughout its term.