Mortgages are an essential part of life for most people – buying real estate is an investment and one of the safest ways to build equity. However, the mortgage industry has seen a decline in demand recently, as interest rates have risen close to 8%. This drop in demand is the lowest it has been since 1995. As interest rates rise, the cost of borrowing money becomes higher. This makes it harder for people to be able to afford monthly mortgage payments, and leads to a reduction in mortgage applications. The higher interest rates also make it more difficult to qualify for mortgages. Some lenders are beginning to tighten their qualifications even further, as they are feeling the strain of the decreased demand. The imbalance in supply and demand also has an effect on home prices. As the demand for mortgages diminishes, sellers often need to lower their prices in order to attract buyers. The lower prices can be beneficial for buyers as they are able to get better deals on homes. However, these low prices can put pressure on the industry as there is less profit to be made. This decrease in demand has hit the mortgage industry hard and caused many lenders to become more creative in order to draw in customers. This includes different loan products and promotions, such as waived application fees and lower rates for certain loan types. It is uncertain how and when the mortgage industry will return to pre-pandemic levels. However, until this happens, borrowers should expect mortgage rates to remain high and anticipate tougher requirements when applying for a loan. Interest rates have begun to fall slightly in 2021, so there is hope that as we move further into the year, demand will pick up and more people will be able to purchase homes.