Home mortgage application is up by 4.1% from the previous week, according to the Mortgage Bankers Association as the refinance market remains strong.
The rise in home mortgage application is attributed to mortgage rates hovering near a record low.
There has been an increase in the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $510,400 or less increased to 3.20% from 3.19%. Meanwhile, points, including origination fee, rose to 0.35 from 0.33 for loans with a 20% down payment.
“Mortgage applications increased last week despite mixed results from the various rates tracked in MBA’s survey,” said Joel Kan, an economist for the trade group. “The average 30-year fixed rate mortgage rose slightly to 3.20%, but some creditworthy borrowers are being offered rates even below 3%.”
This propelled the refinance application volume by 5% for the week and an increase of 122% compared with the same week one year ago, based on the ’s seasonally adjusted index data. The refinance share of mortgage activity soared to 64.8% of total applications from 64.2% the previous week.
Moreover, the average on the 30-year fixed remained 88 basis points higher; 3.19%, where it was two weeks ago, was considered a record low.
Fannie Mae chief economist Doug Duncan said that around 60% of all outstanding loan balances have at least a half-percentage point incentive to refinance.
Data showed that consumers now get used to buying properties they have online seen online through virtual tours.
In early June, mortgage applications increased by 18% as homebuyers return to the market, according to the Mortgage Bankers Association’s seasonally adjusted index.
Findings revealed that mortgage demand to buy a house soared by 5% for the week and were 18% higher than a year ago.
Mortgage applications were down 35% annually as the coronavirus outbreak was taking place six weeks ago.
“The pent-up demand from homebuyers returning to the market continues to support a recovery from the weekly declines observed earlier this spring,” said Joel Kan, an MBA economist.
“However, there are still many households affected by the widespread job losses and current economic downturn. High unemployment and low housing supply may restrain a more meaningful rebound in purchase applications in the coming months.”
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of up to $510,400 fell from 3.42% to 3.37%. Points, including the origination fee, for loans with a 20% down payment dropped from 0.33 to 0.30.
Meanwhile, pending home sales increased by 44.3% in May as homebuyers reemerge and return to the market, according to the National Association of Realtors.
This is considered the biggest one-month rise in the history of the survey, which dates back to 2001. It defeated expectations of a 15% gain. Sales remained 5.1% lower compared with May 2019.
Pending sales measure signed contracts on current homes, so it signifies that homebuyers were out looking throughout the month of May. Sales dropped by 22% for the month in April, as economic activities were put to a halt to contain the spread of the coronavirus.
“This has been a spectacular recovery for contract signings, and goes to show the resiliency of American consumers and their evergreen desire for homeownership,” said Lawrence Yun, NAR’s chief economist. “This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.”
