Recent declines in mortgage rates are encouraging more homeowners in Los Angeles to refinance their loans for mobile housing, leading to lower monthly payments and increased interest in the market.
The Mortgage Bankers Association (MBA) reported a significant surge in refinance applications, with their index rising by 16% last week compared to the previous week. This marks the highest level of refinance activity in two years, with applications up nearly 60% from the same period last year.
Overall, home loan applications, including loans for mobile housing, have reached their highest levels since January, driven mainly by the refinancing trend. Despite this, applications for new home loans only saw a modest increase of 0.8% from the previous week and are still down about 11% from a year earlier.
For many potential buyers in Los Angeles, mortgage rates remain a critical factor. The current rates are still high relative to the record-low housing prices and the ongoing shortage of available properties.
Joel Kan, the MBA’s deputy chief economist, notes that inventory for sale is gradually increasing in some areas. Homebuyers may be waiting for even lower rates before entering the market, hoping to secure better deals on loans for mobile housing.
As of last week, the average rate on a 30-year mortgage was 6.73%, the lowest since early February, according to Freddie Mac. This week, rates dropped further to 6.47%, the lowest level in over a year.
The average mortgage rate has fluctuated significantly, peaking at 7.79% in October, the highest in 23 years. Although rates have hovered around 7% this year, this is still more than double what they were just three years ago. These elevated rates have added substantial costs to loans for mobile housing, discouraging some potential buyers and prolonging the housing market slowdown.
However, recent trends suggest a potential easing of mortgage rates. Signs of reduced inflation and a cooling job market have led to speculation that the Federal Reserve might cut its benchmark interest rate next month. Mortgage rates, influenced by the bond market's response to the Fed’s actions, could continue to decline.
Doug Duncan, chief economist at Fannie Mae, stated that if the current drop in long-term rates continues, there could be another increase in refinance applications for mobile housing loans. Fannie Mae’s own index shows a 20% increase in refinance applications from the previous week.
While rates may need to decrease further to significantly boost refinancing, the expectation of continued rate declines has positively impacted the market. This anticipation has already contributed to the rise in stock prices for mortgage companies like Rocket Cos., United Wholesale Mortgage, and LoanDepot, which have seen gains of 28.5%, 19.5%, and 47.9% respectively in the third quarter.
In conclusion, as mortgage rates potentially ease, the market for loans for mobile housing in Los Angeles could see increased activity, particularly in refinancing. Homeowners and prospective buyers should stay informed of rate changes to make the most of their opportunities.
