Home Purchase Mortgage Demand Rebounds 54% From April
May 27th, 2020 @ 1:12 PM by Amber Nelson
U.S. homebuyers did not let the COVID-19 hold them back for long. Mortgage applications to buy a home have risen dramatically for each of the past six weeks, with a 9% increase in the past week alone, according to the Mortgage Bankers Association.
Home purchase applications have now bounced back 54% since early April when the coronavirus crisis shutdown most open houses and home viewings. The return of a strong buying season has happened much faster than most experts predicted.
“The housing market is continuing its path to recovery as various states reopen, leading to more buyers resuming their home search,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Additionally, the purchase loan amount has increased steadily in recent weeks and is now at its highest level since mid-March.”
On a yearly basis, home purchase mortgage requests are also up 9%.
Total mortgage application volume rose just 2.7% for the week, however, as a 0.2% drop in refinance requests tempered the home purchase gains.
“Despite mortgage rates hovering near MBA’s all-time survey low, refinance activity was essentially flat but still 176 percent higher than last year,” Kan explained. “Conventional refinance applications increased 2 percent, while government refinancing was down almost 7 percent.”
Freddie Mac reported that the average rate on a 30-year fixed-rate mortgage fell to 3.24% with an average 0.7 point, down from 3.28% the previous week. Even with the decline in rates, refinances declined as millions have entered forbearance, disqualifying themselves for immediate refinance loans. Others may be scared off by reports of tightened mortgage underwriting standards.
Refinance requests made up 62.6% of all applications, down from 64.3% the week before.
Adjustable rate mortgages gained popularity, rising to 3.4% of total applications from 2.9% last week.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.