Key Highlights
- Homebuyer mortgage demand spikes +33%
- Mortgage interest rates fell to 3.03% last week, an all-time low
Homebuyers rushed into the market last week as mortgage interest rates hit yet another record low. Purchase applications rose +5% for the week AND were an eye-popping +33% compared to one year ago at this time, according to the Mortgage Bankers Association’s index.
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The only thing reining in demand was the seemingly omnipresent record low supply of homes for sale.
Applications to refinance a home loan rose just +0.4% last week from the previous week but even refinance demand was +111% higher than one year ago at this time. The refinance share of overall mortgage activity decreased to 60.1% from 61.2% the week prior.
Rates for both 30-year and 15-year fixed mortgages fell to 3.03% and 2.51%, respectively. According to Freddie Mac, the 30-year rate of 3.03% is the lowest rate going back to 1971 and the 15-year rate of 2.51% is the lowest rate going back nearly 30 years.
These downward rate spirals are, according to Sam Khater, economist with Freddie Mac, reactions to the dangerous COVID-19 resurgence in the Southwest. This resurgence essentially wiped out optimism from last month’s economic reports that indicated the jobs market was recovering quickly from the COVID induced recession.
Khater said, “The summer is heating up as record low mortgage rates continue to spur homebuyer demand. However, it remains to be seen whether the demand will continue if COVID cases rise to the point that it hinders economic growth.
Economists with Goldman Sachs led by its chief economist, Jan Hatzius, commented that the resurgence in the COVID pandemic has “…already been much worse than we anticipated, and further restrictions will likely be required in some states to bring the virus under control.”
How long can interest rates remain at such record lows? Matthew Graham, CEO with Mortgage Daily News, said, “Prediction is tough, but what I can say is that a lot of us who watch the market very closely are on high alert for signs that the low rate environment is under imminent threat. While that could change with even one major coronavirus headline, we’re not seeing that threat as of today.”
Thanks to CNBC and HousingWire.
Also read: What First-Time Buyers Want from Government, Is There A Connection Between Student Loan Debt & The Subprime Mortgage Crisis?, Helping Your Clients Understand Mortgage Forbearance
