Applications for mortgages to purchase homes gained for the fifth consecutive week while refinancings dropped, the Mortgage Bankers Association said in a Wednesday report.
MBA’s seasonally adjusted index measuring purchase applications rose 6% last week, according to the report. Applications for refinancings fell 6% from the prior week, though the level was 160% higher than a year ago, MBA said.
The consecutive weekly increases in purchase applications may be a sign the housing market is beginning to recover from the impact of COVID-19, said Joel Kan, MBA’s associate vice president of economic and industry forecasting.
“As states gradually reopen and both homebuyer and seller activity increases, we will be closely watching to see if these positive trends continue, or if they reflect shorter-term, pent-up demand,” Kan said.
Refinance activity fell to its lowest level in over a month despite mortgage rates remaining close to record lows. The average loan amount for refinances hit its lowest level since January, according to the report.
The low interest rates should result in an increase in refi applications for borrowers who still have jobs, Kan said.
“We still expect a strong pace of refinancing for the remainder of the year because of low mortgage rates,” Kan said. “With many homeowners still facing economic and employment uncertainty, these refinance opportunities will allow them to save money on their monthly payments, which can then be used to help other areas of their budgets.”
The Market Composite Index, a measure of overall application volume, decreased 2.6% on a seasonally adjusted basis from the prior week. Government purchase applications, which include Federal Housing Association loans, Veterans Administration loans, and United States Department of Agriculture loans, were 5% higher than a year ago.
Here is a more detailed breakdown of this week’s mortgage application data:
- The FHA’s share of mortgage apps remained unchanged from the week prior at 11.5%.
- The VA share of applications fell from 13.7% to 13.4%.
- The USDA share of total applications increased from 0.6% to 0.7%.
- Mortgage interest rates for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) fell to 3.41% from 3.43% the week before.
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) fell to 3.66% from 3.69%.
- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased from 3.37% to 3.46%.
- The average contract interest rate for 15-year fixed-rate mortgages decreased from 2.92% to 2.88%.
- The average contract interest rate for 5/1 ARMs decreased to 3.19% at 3.26%.