- Mortgage applications to purchase a home gained 5% last week and were 18% higher than a year ago, according to a Wednesday report from the Mortgage Bankers Association.
- The spike in applications signals that homebuyers are returning to the market as it reopens following coronavirus lockdowns.
- In addition, record-low interest rates may be fuelling the pent-up demand in the housing market.
- Read more on Business Insider.
As states across the country reopen from the coronavirus pandemic, potential homeowners are rushing back to the housing market, spurred by record-low interest rates.
Mortgage applications to purchase a home jumped 5% last week and are 18% higher than they were one year ago, according to the Mortgage Bankers Association’s seasonally adjusted index.
“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, in a press release.
In May, the average rate for the standard 30-year fixed mortgage fell to 3.15%, the third time it’s hit a record low since March, according to Freddie Mac.
Still, not everyone is taking advantage of the falling rate – refinance applications fell 9%, the seventh week in a row of declines, according to the MBA. The slump has continued even as the MBA’s own measure of the 30-year fixed rate fell to 3.37%, a survey low.
“After reaching a peak of 76 per cent earlier this year, refinances now account for less than 60 per cent of activity, and the index is now at its lowest level since February 21,” said Kan.
And, while the jump in purchase applications is a positive sign now, it might not foreshadow an emerging trend.
“There are still many households affected by the widespread job losses and current economic downturn,” said Kan. “High unemployment and low housing supply may restrain a more meaningful rebound in purchase applications in the coming months.”