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Despite rising interest rates, mortgage demand starts to increase marginally
Mortgage applications saw a slight uptick, rising 7.4% last week according to the Mortgage Bankers Association’s index. Despite interest rates increasing to 6.79% for 30-year fixed-rate mortgages with conforming loan balances, applications for refinancing a home loan increased 9% from the previous week but are still 76% lower than the same week in 2022. Home purchases saw a 7% increase in mortgage applications from the previous week, but remained 42% lower than the same week a year ago. The rise in demand could be the beginning of the traditionally busy spring market.
According to the CEO, commercial real estate is in for a "shock coming" when return-to-office initiatives fail
Mark Dixon, CEO of IWG, predicts a "shock" for commercial real estate. The pandemic caused a "fundamental seismic shift" and made people work from home. Employees are more productive now than ever before and don't want to waste time and money commuting. The US has large property companies handing back properties to their banks, but there's an opportunity for real estate to change. Offices could work like gas stations in a network that is easy to use. Dixon says IWG has a huge opportunity, with over 3,300 offices in 120 countries.
Mortgage rates increase back to over 7% as fears of inflation push yields higher
According to Mortgage News Daily, the 30-year fixed mortgage average rate rose above 7% on Thursday to 7.1% due to increasing inflation fears. Mortgage rates follow the U.S. 10-year Treasury yield, which has been on the rise. This week's data has not been promising, and upcoming reports are anticipated to worsen. Homebuyers are feeling the effects of the higher rates, with a $400,000 home with 20% down on a 30-year fixed loan now costing about $230 more per month than a month ago. Mortgage applications from homebuyers are dwindling, with last week hitting a 28-year low. The housing market appeared to be recovering at the start of the year, but rising rates have stalled the progress. The increase in interest rates will exacerbate the financial burdens of consumers, affecting consumer choices in the future. It is uncertain how long rates will continue to rise. A friendlier inflation implication from more significant data could trigger a rate correction, but traders will require several months of lower inflation before pushing rates lower.
Leasing Activity in Manhattan Drops to Two-Year Low
In February 2023, Manhattan's office leasing activity decreased to less than one-third of January's volume, with only 65,000 square feet as the largest transaction. It was also the lowest leasing month since April 2021, and leasing velocity was below the monthly averages for 2021 and 2022. The availability rate grew to 17.2%, and the available supply increased by 72.3% since March 2020 to 92.8 million square feet. The average asking rent decreased to $74.93 per square foot, down by 0.2%, but up by 3.1% since the pandemic low in August 2021. These figures reflect a drop in demand for Manhattan's office spaces.
