Mortgage rates took a sudden downturn the past few weeks, and with it, the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey found a week-over-week rise of 8.6% in mortgage apps, up from 3.7% last week.
The refinance share of mortgage activity increased to 60% of total applications from 59.2% the previous week. This rise in refis could be attributed to the two-week slide in mortgage rates as they inch closer to the 3% mark.
"Mortgage rates dropped to their lowest levels in around two months, prompting a small resurgence in refinance activity after six weeks of declines. Borrowers acted on the decrease in rates for most loan types, with both conventional and government refinance applications showing gains," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "The spring housing market also saw a boost from lower rates, with purchase applications—driven by a jump in conventional applications—increasing over 5%. MBA expects the purchase market to remain strong, with the recovering job market and supportive demographics fueling housing demand in the months ahead."
The seasonally-adjusted Purchase Index increased 6% from one week earlier. The unadjusted Purchase Index increased 7% compared with the previous week and was 57% higher than the same week one year ago.
In terms of loan types, the FHA share of total applications increased to 11.3% from 10.8% the week prior. The VA share of total applications decreased to 11.5% from 12.1% the week prior. The USDA share of total applications remained unchanged from 0.4% the week prior.
"The average loan size for purchase applications increased after a few weeks of declines, as fewer homes available for sale make for a competitive buying market that is accelerating home-price growth,” said Kan.
And the upswing in mortgage apps could signal an overall improvement in the nation’s economic situation, as Fannie Mae’s Economic and Strategic Research (ESR) Group, recently reported that full-year 2021 real GDP growth expectations improved to 6.8%, including 9.1% annualized growth in Q2, due predominately to the continued easing of virus-related gathering restrictions and stimulus-driven consumer spending.
In addition, RE/MAX Holdings has reported that home sales in March rose by one-third over February's totals, as continued demand from homebuyers drove the median sales price up above $300,000. Higher priced homes are selling at a rapid clip as well as noted by RE/MAX Holdings CEO Adam Contos: “On average, homes that sold last month had been on the market just 38 days, nearly three weeks less than the March average of 59 days from the past four years.”
With this week’s application numbers as evidence, hungry homebuyers are not being dissuaded by rising prices, as long as rates continue to edge toward the 3% region.