Mortgage applications are down. Here's why buyers may want to act now.

New survey data shows that mortgage applications are down week-over-week, signaling that mortgage loan demand is declining despite slightly lower mortgage rates. According to the most recent Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey, mortgage application volume decreased by 0.7% for the week of March 22, 2024, compared to one week prior. 

"Mortgage application activity was muted last week despite slightly lower mortgage rates. The 30-year fixed rate edged lower to 6.93 percent, but that was not enough to stimulate borrower demand," Joel Kan, MBA's Vice President and Deputy Chief Economist, stated in the report. "Purchase applications were essentially unchanged, as homebuyers continue to hold out for lower mortgage rates and for more listings to hit the market."

But while many would-be buyers are waiting for better mortgage rates, that may not be the best course of action in today's market. With mortgage applications down on a weekly basis, it could make more sense to act now. Here's why 

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Mortgage applications are down. Here's why buyers may want to act now.

There are a few reasons that lower mortgage application volume could signal that this is the time to act. Here are a few to consider:

It's more likely that your offer will be accepted

The probability of your offer being accepted by the seller often hinges, at least in part, on buyer demand. After all, when there are more buyers in the market, there are typically more offers on desirable properties. But with fewer buyers in the market, sellers may be more likely to accept your offer, as there's less competition from other buyers. 

If you wait for lower mortgage rates, though, you may have to compete with a larger buyer pool, and you could miss out on the opportunity to own your dream home if competition is stiff in your market. If you act now, though, you'll likely have fewer buyers to compete with, which could increase your chances of landing a contract on a home.  

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You could have more negotiating power

It can be easier to buy a home when there are fewer buyers in the market, and that's not just true in terms of getting your offer accepted. Purchasing your home when buyer demand is lower could mean getting a better price on the home. 

After all, sellers who receive multiple offers on their homes may be less likely to negotiate. And, in very competitive markets, buyers may need to offer over the asking price to be considered. However, when there are fewer buyers in the market, you may be able to negotiate with the seller on the price of the home. 

If you wait, though, home prices could continue to climb. 

"With our record low inventory, even when rates drop, there is not going to be enough supply for demand," says Caryn Prall, chief of growth and industry at Keller Home Loans. "This will keep prices steady or increasing."

You can still take advantage of lower rates in the future

Buying a home now doesn't mean you're locked into today's high mortgage rates for the life of your loan. You may still be able to capitalize on any potential mortgage rate drops in the future. Here's how: 

• By opting for an adjustable-rate mortgage (ARM): ARM loans start with a fixed-rate period that can last from a couple of years to 10 years. That's followed by an adjustable-rate period in which the mortgage rate on your loan can change according to the terms of your loan agreement. That means an adjustable-rate loan could allow you to capitalize on mortgage rate drops in the future. It's important to note, though, that if rates go up, your ARM rate could increase in tandem. 
• By refinancing when rates decline: Buying a home now and refinancing your mortgage loan later could allow you to purchase a home while buyer competition is down while taking advantage of lower mortgage rates in the future. 

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The bottom line

With fewer buyers in the market, it could be a good time to land the home of your dreams at a reasonable price. But if you want to capitalize on the decline in competition from other buyers, you may want to act quickly. Demand could increase again if mortgage rates start to fall. And, buying a home now doesn't mean you're stuck with the mortgage rate forever. By opting for an ARM loan or refinancing to a new loan in the future, you could capitalize on today's more favorable buyer landscape while securing a more affordable rate down the road.