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Mortgage Demand From Homebuyers Jumps 18%, as Rates Set New Low

Mortgage Demand From Homebuyers Jumps 18%, as Rates Set New Low
(Karenr/Dreamstime)

By    |   Wednesday, 03 June 2020 12:13 PM

Mortgage applications to purchase a home rose 5% for the week and were a stunning 18% higher than a year ago, as the average rate on the 30-year fixed mortgage hit another record low, 3.37%.

As the coronavirus outbreak was surging six weeks ago, applications by homebuyers were down 35% annually, CNBC explained.

Mortgage applications decreased 3.9 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey, which included an adjustment for the Memorial Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 3.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 14 percent compared with the previous week. The Refinance Index decreased 9 percent from the previous week and was 137 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 5 percent from one week earlier. The unadjusted Purchase Index decreased 7 percent compared with the previous week and was 18 percent higher than the same week one year ago.

"Purchase applications continued their recent ascent, increasing 5 percent last week and 18 percent compared to a year ago. The pent-up demand from homebuyers returning to the market continues to support a recovery from the weekly declines observed earlier this spring," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "However, there are still many households affected by the widespread job losses and current economic downturn. High unemployment and low housing supply may restrain a more meaningful rebound in purchase applications in the coming months."

Added Kan, "In contrast to the upswing in purchase activity, refinance applications fell for the seventh consecutive week - even as the 30-year fixed rate hit another MBA survey-low of 3.37 percent. After reaching a peak of 76 percent earlier this year, refinances now account for less than 60 percent of activity, and the index is now at its lowest level since February 21."

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.37 percent from 3.42 percent.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.85 percent from 2.87 percent.

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Homebuyers are returning to the market in record numbers as much of the United States has begun to reopen following weeks of unease during the coronavirus pandemic.
mortgage, homebuyers, loan, rates
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2020-13-03
Wednesday, 03 June 2020 12:13 PM
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