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Mortgage Applications to Purchase Homes Rise 6% as Rates Continue to Slide

Mortgage Applications to Purchase Homes Rise 6% as Rates Continue to Slide
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By    |   Wednesday, 20 May 2020 12:07 PM

Mortgage applications to purchase a home rose 6% last week from the previous week as loan rates continued to fall, according to the Mortgage Bankers Association.

Weaker refinance demand pushed total mortgage application volume down 2.6% for the week, the MBA said.

The refinance share of mortgage activity decreased to 64.3% of total applications from 67% the previous week.

“Applications for home purchases continue to recover from April’s sizable drop and have now increased for five consecutive weeks,” said Joel Kan, an MBA economist.

“Government purchase applications, which include FHA, VA, and USDA loans, are now 5 percent higher than a year ago, which is an encouraging turnaround after the weakness seen over the past two months.”

As states reopen, so are open houses, and buyers have been coming out in force, if masked, CNBC explained. 

Low rates are not, however, giving current homeowners much incentive to refinance. Those applications fell 6% for the week but were still 160% higher than one year ago, when interest rates were 92 basis points higher. That is the lowest level of refinance activity in over a month.

“The average loan amount for refinances fell to its lowest level since January — potentially a sign that part of the drop was attributable to a retreat in cash-out refinance lending as credit conditions tighten,” said Kan. “We still expect a strong pace of refinancing for the remainder of the year because of low mortgage rates.”

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.41 percent from 3.43 percent.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.88 percent from 2.92 percent.

Meanwhile, the Federal Housing Finance Agency -- Fannie Mae and Freddie Mac’s regulator -- said Tuesday that borrowers will be able to obtain new loans three months after their forbearance period ends. The announcement responds to concerns that Fannie and Freddie rules might have made borrowers ineligible for new mortgages, or to refinance existing loans, for a year, Bloomberg said.

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Mortgage applications to purchase a home rose 6% last week from the previous week as loan rates continued to fall, according to the Mortgage Bankers Association.
mortgage, applications, purchase, homes, rates
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2020-07-20
Wednesday, 20 May 2020 12:07 PM
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