KEY POINTS
- Mortgage applications to purchase a home rose just 0.4% last week from the previous week but were a remarkable 33% higher than a year ago, according to the Mortgage Bankers Association.
- Pent-up demand from the disastrous spring market and the new stay-at-home mindset combined to send more consumers rushing to either buy homes for the first time or upgrade what they already have.
- Low mortgage rates are only adding fuel to the fire.
Homebuyers appear to have a pressing craving for new and existing houses, requesting home loans at an incredible rate.
Home mortgage applications to acquire a house increased simply 0.4% recently from the previous week but were a remarkable 33% greater than a year earlier, according to the Mortgage Bankers Association.
August is the new April, thanks to the coronavirus pandemic. Pent-up demand from the devastating spring market and the brand-new stay-at-home frame of mind integrated to send out more consumers hurrying to either buy houses for the first time or update what they already have.
Low home loan rates are only adding fuel to the fire. The typical agreement rates of interest for 30-year fixed-rate home loans with adhering loan balances of up to $510,400 were reduced to 3.11% from 3.13%. Points, consisting of the origination charge, increased to 0.38 from 0.36 for loans with a 20% down payment.
“The home purchase market remains an intense spot for the general economy,” stated Joel Kan, an MBA financial expert. “Mortgage rates at record lows and homes looking for more area are driving this summer season’s surge in need.”
Applications to re-finance a mortgage declined 10% for the week however were 34% higher annually. The re-finance market has been choppy, as rates made a remarkable move higher two weeks earlier and then fell back just somewhat. The re-finance share of home mortgage activity reduced to 62.6% of overall applications from 64.6% the previous week, according to the MBA’s seasonally adjusted report.
That spike in rates was partially due to a recent announcement by Fannie Mae and Freddie Mac that they were raising lender costs particularly on refinances, starting Sept. 1.
“The cost is necessary to cover predicted COVID-19 losses of a minimum of $6 billion at the Enterprises,” according to a release from the FHFA, which supervises the two home loan giants.
In the middle of heavy pressure from the mortgage market, however, the FHFA announced late Tuesday a hold-up in the start date to Dec. 1.
“Extending the reliable date will permit lending institutions to close refinance loans that are in their pipelines and honor the rate lock commitments they made to their customers, guaranteeing that financial relief in the type of record low rate of interest will continue to flow to customers,” stated MBA CEO Bob Broeksmit.
