Mortgage applications to purchase a home rose for the third straight week, up 7% compared with a week earlier.
The average contract interest rate for 30-year fixed-rate mortgages decreased to a record 3.40% from 3.43%, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending May 1.
Refinance applications decreased 2% for the week but were 210% higher than a year ago, when rates were over a full percentage point higher.
"Mortgage application volume was unchanged last week, even as the 30-year fixed rate mortgage declined to 3.40 percent - a new record in MBA's survey," said Mike Fratantoni, MBA's Senior Vice President and Chief Economist. "Despite lower rates, refinance applications dropped, as many lenders are offering higher rates for refinances than for purchase loans, and others are suspending the availability of cash-out refinance loans because of their inability to sell them to Fannie Mae and Freddie Mac."
Added Fratantoni, "Purchase volume increased for the third week in a row, led by strong growth in Arizona, Texas and California. Although purchase activity remains almost 19 percent below year-ago levels, this annualized deficit has decreased as more states reopen amidst the apparent, pent-up demand for homebuying."
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.40 percent from 3.43 percent.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.93 percent from 2.98 percent.
Meanwhile, U.S. mortgage firms facing billions of dollars of missed home loan repayments are continuing to push for emergency government support as data published Monday showed a further rise in borrowers asking to halt payments, Reuters reported.
The number of people seeking to have mortgage payments paused or reduced rose to 7.5% as of April 26 from 7.0% a week earlier as the economic effects of the novel coronavirus outbreak stretched household finances, figures from the Mortgage Bankers Association (MBA) showed. The MBA estimates that 3.8 million homeowners are now in forbearance.
The surge in delayed payments could leave mortgage service companies, which pool home loans and sell them to investors, with a liquidity shortfall of as much as $100 billion over the next nine months, according to the MBA. That is because mortgage servicers still have to advance scheduled payments to investors even if borrowers fail to make their payments.
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