Mortgage applications for new home purchases increased for the third week in a row – a sign the housing market is making tentative steps forward amid the coronavirus pandemic.
The Mortgage Bankers Association announced Wednesday that overall mortgage applications increased 0.1 percent last week, while applications for new homes increased 6 percent. MBA’s refinance index decreased 2 percent from the previous week but was 210 percent higher than 2019 levels.
“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.”
The refinance share of mortgage activity decreased to 70 percent of total applications from 71.6 percent the previous week. The adjustable-rate mortgage share of activity increased to 3 percent of total applications.
“Purchase volume increased for the third week in a row, led by strong growth in Arizona, Texas and California,” Fratantoni said. “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.”