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Mortgage Demand to Buy Home Rises 12% as Rates Hit New Record Low

Mortgage Demand to Buy Home Rises 12% as Rates Hit New Record Low
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By    |   Wednesday, 29 April 2020 12:01 PM

Mortgage demand from homebuyers to buy a property rose 12%, signaling a potential turn in buyer confidence amid the seemingly never-ending coronavirus crisis.

Meanwhile, the average contract interest rate for 30-year fixed-rate mortgages decreased to 3.43% from 3.45% last week, CNBC explained.

Mortgage applications to buy a home rose last week, but refinance demand fell 7%, causing total application volume to decline by 3.3% for the week, according to the Mortgage Bankers Association’s seasonally adjusted index.

"The news in this week's release is that purchase applications, still recovering from a five-year low, increased 12 percent last week to the strongest level in almost a month. The ten largest states 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," he said.

"Contributing to the uptick in purchase applications was that mortgage rates fell to another record low in MBA's survey, with the 30-year fixed rate decreasing to 3.43 percent. However, refinance activity declined 7 percent, as rates for refinances likely remained higher than those for purchase loans," he said.

"Lenders are still working through pipelines at capacity, and observed changes in credit availability for refinance loans have also in turn impacted rates."

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.43 percent from 3.45 percent. The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.98 percent from 3.03 percent,

Meanwhile, applications to refinance a home loan fell 7% for the week but were 218% higher than a year ago. Refinances are getting harder to do, as some lenders have stopped offering certain products, due to the new risk in the market from the mortgage bailout program, part of the CARES Act, CNBC said. This has caused rates for refinances to be higher than rates to buy a home.

Elsewhere, contracts to buy existing homes plunged in March by the most since 2010 as the coronavirus forced people to stay at home and the economy spiraled down.

An index of pending home sales fell 20.8% from February, according to National Association of Realtors data released Wednesday. The median forecast in a Bloomberg survey of economists called for a decrease of 13.6%. Compared with a year earlier, contract signings dropped 14.5% on an unadjusted basis.

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Mortgage demand from homebuyers to buy a property rose 12%, signaling a potential turn in buyer confidence amid the seemingly never-ending coronavirus crisis.
mortgage, applications, buy, home, rates, low
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2020-01-29
Wednesday, 29 April 2020 12:01 PM
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