This blog has previously discussed how rising interest rates are affecting the decisions of hopeful homeowners. Recent research continues to underscore this fact, as fewer individuals who already have a mortgage look into refinancing options.
According to the latest report from the Mortgage Bankers Association, for the week ending September 6 of this year, mortgage applications decreased 13.5 percent from one week earlier.
"The Refinance Index decreased 20 percent from the previous week," the report said. "The Refinance Index has fallen 71 percent from its recent peak the week of May 3, 2013 and is at the lowest level since June 2009. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier."
There are many factors for consumers to consider when purchasing a home, but refinancing is usually a top option when there are better interest rates to be found. This data shows that the rising interest rates are making American homeowners think twice.
However, as a recent Quartz article mentions, housing has still been a major driver to U.S. economic recovery. For example, there is the wealth effect of higher home prices driving consumption spending.
Financial organizations need to be aware of this type of information, as it will likely affect the amount of and types of potential borrowers. Strong and current loan management software will be a valuable asset as the housing market works its way back to full strength.
Both lending and decisioning software can help banks of all sizes ensure that they can find borrowers with good credit histories. Refinancing might not always be an option for every homeowner, but the right tools can help financial institutions make sound decisions that are beneficial for all parties involved.