Purchase applications rose 5% weekly for the week ending on May 29, 2020, according to the Mortgage Bankers Association. [1]
This rise is also 18% higher than during the same period last year. Overall, mortgage applications fell 3.9% week-over-week, mostly due to a 14% decline in the Refinance Index. Data from the MBA shows refinances are still 137% during the same week in 2019.
“The pent-up demand from homebuyers returning to the market continues to support a recovery from the weekly declines observed earlier this spring," said Joel Kan, MBA's AVP of Economic and Industry Forecasting. "However, there are still many households affected by widespread job losses and the current economic downturn. High unemployment and low housing supply may restrain a more meaningful rebound in purchase applications in the coming months."
Kan added that while purchases saw a surge, refinance applications fell for the seventh consecutive week. The average 30-year fixed-rate mortgage fell for the seventh consecutive weeks to an MBA-survey low of 3.37%.
Freddie Mac’s latest Primary Mortgage Market Survey [2] found the average 30-year fixed-rate mortgage fell to 3.15%—a new low in the survey’s nearly 50-year history.
“These unprecedented rates have certainly made an impact as purchase demand rebounded from a 35% year-over-year decline in mid-April to an 8 percent increase as of last week—a remarkable turnaround given the sharp contraction in economic activity,” said Sam Khater, Freddie Mac’s Chief Economist. “Additionally, refinance activity remains elevated and low mortgage rates have been accompanied by a $70,000 decline in the average loan size of refinancing borrowers this year. This means a broader base of borrowers are taking advantage of the record low rate environment, which will benefit the economy.”
“After reaching a peak of 76% earlier this year, refinances now account for less than 60 percent of activity, and the index is now at its lowest level since February 21,” Kan said.
The refinance share of mortgage activity fell to 59.5% of total applications from the prior week’s 62.6%.
Total applications for Federal Housing Administration were unchanged from the previous week’s 11.2%. The VA share of total applications decreased to 12% from 12.4% the week prior. The USDA share of total applications increased to 0.7% from 0.6% the week prior.