Interest rates have been plummeting, but the cost of taking out a mortgage hasn’t fallen as fast.
Falling rates are usually a boon to the housing market, since that typically lowers the interest rates that lenders offer on mortgages. Borrowers can then buy homes or refinance their existing mortgages at a lower monthly cost. But they haven’t been feeling the full benefit of the recent rate swoon; one reason the housing market has remained cool over the past year.
Another reason is borrowers’ strong appetite for mortgages is outpacing the lending industry’s ability to provide them as many lenders trimmed their operations last year when mortgage demand dropped.