Mortgage Demand Hits 11-Year High
Jun 17th, 2020 @ 2:53 PM by Amber Nelson
Another week of new interest rates lows helped home purchase demand to climb to its highest level since 2009, according to data from the Mortgage Bankers Association.
“Purchase applications increased to the highest level in over 11 years and for the ninth consecutive week. The housing market continues to experience the release of unrealized pent-up demand from earlier this spring, as well as a gradual improvement in consumer confidence,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Mortgage rates dropped to another record low in MBA’s survey, leading to a 10% surge in refinance applications. Refinancing continues to support households’ finances, as homeowners who refinance are able to gain savings on their monthly mortgage payments in a still-uncertain period of the economic recovery.”
Total mortgage applications rose 8.0% in the latest week. Refinance requests made up the majority of applications, rising 10% for the week and 106% from the year before. The jump in activity was due to mortgage interest rates falling to a new record low. The average rate on a 30-year fixed-rate mortgage dropped to 3.30%, from 3.38%, the lowest average in the 40+-year history of the MBA survey. Refinance loan requests made up 63.2% of all applications this week, up from 61.3% last week.
Mortgage applications for home buying increased 4% in the past week and were 21% higher than a year ago.
Government-backed loan share decreased this week, with FHA loans making up 11.0% of all loans, down from 11.5%. VA loans accounted for 11.5%, down from 12.3% but the USDA share of mortgage applications rose to 0.7% from 0.6%.
Fixed-rate mortgages remain the most popular choice, with adjustable-rate mortgage requests making up just 2.8% of all applications.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.