Illinois Mortgage Applications Drop

New mortgage applications in Illinois dropped precipitously in mid-March amidst the COVID-19 pandemic and a flood of refinance applications. 

On March 3rd, 2020, the Federal Reserve announced the largest cut to the interest rate since the 2008 banking crisis, pushing the interest rate between 0.00% and 0.25%. Mortgage rates, too, saw a further decrease to historic lows.

As a result, many people rushed to refinance their loans. The first two weeks of March saw a 35% increase in refinance applications than from the same time last year. Many lenders could not keep up with the demand and had to re-raise their rates to level out the flow of new applications. 

After the flood of applications in the first two weeks, Illinois only saw a 2% increase in application activity in the third week of March compared to 2019. 

The interest rate cut and the dampening of the real estate market have both been partially COVID-19 induced. However, the Chicago real estate market had been hot, so at least some of the initial surge can be attributed to spring-time home buyers or refinancers entering the market earlier than expected.

The exact number of new mortgage applications and refinancing applications is not yet available, but most economists think that applications for new mortgages will likely continue to decrease. Given the economic uncertainty at both the macro and micro level, new buyers are likely going to wait until they feel more confident with their purchase.

Refinancing will likely pick back up a little sooner. That entire process can be taken care of remotely, and given the low mortgage rate, many will remain interested in refinancing.

Now, that spring is here and mortgage rates are hovering around all-time lows, there quite possibly has never been a better time to purchase a property. For legal guidance throughout your home buying journey, get in touch with a residential real estate attorney at Lee Scott Perres, P.C.