Mortgage Demand Jumps as Rates Hit 2-Month Low

Key Highlights

• Last week’s mortgage demand jumped for first time since end of February
• Refis jumped +10% but still lower than same week last year

When Interest Rates Drop, Expect Demand for Mortgage Lenders to Rise

According to the Mortgage Bankers Association (MBA), the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) dropped from 3.27% to 3.20% last week.  Points increased to 0.36 from 0.33 with a 20% down payment. Last year in the same time frame, that rate was 25 basis points higher.

Potential Homeowners Jumped on Mortgage Applications

Purchase applications increased +6% for the week.  They were also 57% higher compared to the same week last year.

Existing Homeowners Jumped on Refinance Applications

Refi applications jumped +10% for the week as, according to Joel Kan, MBA associate vice president of economic and industry forecasting, “…mortgage rates dropped to their lowest levels in around two months, prompting a small resurgence in refinance activity after six weeks of declines.”

The refinance share of mortgage activity represented 60% of total mortgage applications.

Kan continued,  “Borrowers acted on the decrease in rates for most loan types, with both conventional and government refinance applications showing gains.

Short-Term Outlook on Mortgage Market

Kan said, “ The MBA expects the purchase market to remain strong, with the recovering job market and supportive demographics fueling housing demand in the months ahead.”

It is the hope of many real estate professionals that the more Americans are vaccinated for the COVID-19 virus, the more sellers will feel comfortable about listing their homes for sale as new listings continue to languish.

Thanks to CNBC. 

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