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Mortgage Applications Are On the Rise

According to a new report, as investors’ confidence in an economic rebound has waned, mortgage rates collapsed, resulting in more applications and increased refinancing. Here’s the latest. 

Mortgage applications grew by 6.8% (on a seasonally adjusted basis) over the previous week during the week ending August 7, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey. 

Meanwhile, the Index ballooned 6% on an unadjusted basis compared with the previous week, while there was a 9% uptick in the Refinance Index from the week before. From the same week a year ago, the Index was higher by 47%. There was a 2% jump from a week earlier in the seasonally adjusted Purchase Index, with a 1% rise in in the unadjusted Purchase Index from the previous week. From the same week a year ago, it was higher by 22%.

As investors’ confidence in an economic rebound waned following a rise in coronavirus cases, mortgage rates last week collapsed across the board, said Joel Kan, MBA's AVP of Economic and Industry Forecasting. 

“Loan types such as the 30-year fixed, 15-year fixed, and jumbo all reached survey lows,” he continued, while refinance activity responded to these lower rates, with the refinance share reaching almost 66% of all applications—its highest level since May. At the same time, the refinance index jumped 9%, reaching its highest level since April.

Contrasted with the same week a year ago, home purchase activity sustained its strong run with an increase of 2% increase throughout the week. It climbed approximately 22% compared to the same week a year earlier, he said. 

While this remained upbeat news for the purchase market, the slow pace of the job market’s improvement and a tight housing inventory continued to pose a concern for coming months—even in  light of continued support stemming from low mortgage rates, remarked Kan. 

There was a 65.7% spike of total applications from 63.9% the week before in the refinance share of mortgage activity and a 2.7% drop off in the adjusted rate mortgage share of activity of total applications. 

The FHA share of total applications bounced to 10.4% from 9.6% the prior week. Meanwhile, the VA share of total applications rose to 11.4%, compared to the week before, when it stood at 11.2%. Holding steady from the week before was the USDA share of total applications at 0.6%. 

The momentum in mortgage applications continued its roll. For the week ending July 3, there was a 2.2% surge in mortgage applications from the week before, based on MBA data.  

The Index sagged 8% on an adjusted basis while the Refinance Index went in the other direction. It rose 0.4% from the previous week.

In the shadow of heightened trepidation spawned by COVID-19, mortgage rates toppled to another record low, offsetting the influences from a week of mostly optimistic economic data, such as June factory orders and payroll employment, Kan said.

There was a drop of 3.25% in the 30-year fixed-rate. Dating back to late March, it’s off 53 basis points.

About Author: Chuck Green

Chuck Green has contributed to the Wall Street Journal, Washington Post, Los Angeles Times, San Francisco Chronicle, Chicago Tribune and others covering various industries, including real estate, business and banking, technology, and sports

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