Home Loan Requests Jump as Buyer Reenter Housing Market
Apr 29th, 2020 @ 11:54 AM by Amber Nelson
Even though total mortgage application volume fell, home purchase loan requests climbed 12% in the latest weeks, according to the Mortgage Bankers Association. At the same time both mortgage rates and refinance applications fell.
As several states reopened from coronavirus stay-at-home orders, home buyers seemed to resurface everywhere, in what could be a indication of renewed confidence in the housing market.
“The 10 largest states [by application volume] had increases in purchase activity, which is potentially a sign of the start of an upturn in the pandemic-delayed spring homebuying season, as coronavirus lockdown restrictions slowly ease in various markets,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “California and Washington continued to show increases in purchase activity, with New York seeing a significant gain after declines in five of the last six weeks.”
However, total home purchase application volume is still down 20% over a year ago.
And even though long-term mortgage interest rates dipped again this week, refinance requests fell 7% pushing total mortgage applications 3.3% lower. Refinance requests made up 71.6% of all mortgage activity, down from 75.4% the week before. The average rate on a 30-year fixed-rate mortgage fell to 3.43% with 0.34 points, down from 3.45% with 0.29 points.
Rates are down almost a full point from a year ago and refinance applications are up 228% on a yearly basis but since the onset of the COVID-19 shutdown measures, refinances have been harder to obtain. The mortgage forbearance program that is part of the CARES Act has created plenty of extra risk for lenders and many are no longer offering all the same products. In some cases, refinance rates are higher than home purchase loans.
“Lenders are still working through pipelines at capacity, and observed changes in credit availability for refinance loans have also in turn impacted rates,” Kan said.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.