Mortgage applications jumped 1.2% from June as interest rates for 30-year fixed mortgages continue to moderate. The refinance business has also ticked up 2% while still down dramatically from last year.
Even in the face of inflation and the questions around whether the U.S. economy is in a recession or not, these numbers show there are glimmers of hope out there. Let’s see if it continues.
Are ARMS an option?
Adjustable Rate Mortgages are making a bit of a comeback.
In the simplest terms, an ARM allows homebuyers to lock in a rate for 5, 7 or 10 years after which the rate could be adjusted up or down.
Currently the rate for a 5-year ARM sits at 4.9%.* ARMs tend to be a good option for young, single buyers looking for a starter home or condo. ARMs can also lessen the financial burden for couples expanding their family. For homeowners expecting to move within 5-to-10 years because their job, ARMs make a lot of sense. The bottom line is, ARMs are smart way to lock in a lower rate today, and they offer homeowners the flexibility to refinance to a conventional fixed rate mortgage should rates go down in the future. It’s not a surprise that home buyers want additional flexibility when it comes to mortgages in the current environment.
Home rentals keep jumping
No doubt the pandemic and remote work had people rethinking where they wanted to live. Higher interest rates and increasing property values forced a lot of would-be homebuyers to look into renting, and that has caused the home rental market to dramatically increase.
Today, the average rent for a single family home clocks in at $2,495 a month. That’s a 13.4% increase from 2021. While that’s a national average, coastal cities have a lock on the more expensive rents.
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Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply.
* National average rates accurate as of 8/3/22 from Mortgage News Daily and are not advertised rates from Guaranteed Rate.
John Kistner is Guaranteed Rate’s Market Analyst. Market Updates are designed to provide readers with a high-level yet insightful view of how economic news, events and trends affect mortgage rates and the homebuying process.