Housing demand remains strong, says MBA
After hitting a record-low the previous week, US mortgage applications have jumped 16% as interest rates dropped again.
The spike has been driven by an increase in refinance volume, according to Joel Kan, AVP of economic and industry forecasting at the Mortgage Bankers Association. MBA’s refinance index rose 20% for the week ending July 09, following a 2% dip the previous week. The seasonally adjusted purchase index grew 8%, while the unadjusted purchase index fell 13% from a week ago.
“Treasury yields have trended lower over the past month as investors remained concerned about the COVID-19 variant and slowing economic growth,” Kan said. “Mortgage rates fell for the second consecutive week as a result, with the 30-year fixed-rate hitting 3.09%, its lowest level since February 2021. Refinance applications increased over 20% last week after adjusting for the July 04 holiday, aided by a 23% increase in conventional refinance applications.”
Kan also noted that there might have been a “delayed spillover” of applications from last week when rates also decreased, but there was not much response in refinance applications.
The refi share of mortgage activity was up from 61.6% to 64.1% of total applications. The adjustable-rate mortgage (ARM) share of activity inched up to 3.5% of total applications.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased from 3.15% to 3.09%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) decreased from 3.20% to 3.16%.
“Purchase applications increased last week, but average loan sizes decreased to their lowest level since January 2021,” Kan said. “We continue to see ebbs and flows as housing demand remains strong, but for-sale inventory remains low. However, lower rates may be helping some home buyers close on their purchases, especially first-time home buyers. The year-over-year comparisons were down significantly for both purchase and refinance applications, as they were relative to a non-holiday week in 2020.”