Mortgage applications rose 2.2% from the prior week, according to data from the Mortgage Bankers Association's (MBA) Weekly [1] Mortgage Applications Survey for the week ending July 3, 2020.
An adjustment for the July 4th holiday was factored into this week’s results.
Compared to the prior week, the Index sagged 8% on an adjusted basis while the Refinance Index headed the other way, bouncing 0.4% from the previous week. Compared to the same week a year ago, when it was up 111%.
Purchase applications soared from the prior week, rising 33%.
In light of renewed fears of a resurgence in the coronavirus, mortgage rates sagged to another record low, said Joel Kan, MBA's AVP of Economic and Industry Forecasting. “It offset the influences from a week of mostly positive economic data, such as June factory orders and payroll employment,” he said.
The 30-year fixed-rate slipped to 3.26 percent; down 53 basis points since late March.
After accounting for the holiday break, borrowers acted in response to these lower rates, he said. With an increase of 5% to the highest rates in nearly a month—and 33% from last year—the recovery of purchase applications continued. There was an increase to $365,700 in the size of the average purchase loan. As borrowers dealt with a finite supply and escalating home prices, it represented another high-water mark, noted Kan, who added that refinance applications modestly ticked up, fueled driven by a 2% jump in conventional refinances. Overall, compared to last year, refinance activity ratcheted up 111%.
More than 75% of all U.S. retail residential mortgage applications are covered by the survey, which has been conducted weekly since 1990.
Meanwhile, there was a 62% spike from a year ago in rate lock volume for the week of June 27 (week 27), building on its run of a strong upward trend over the last several weeks, according to the AEI Housing Center. The report states that, on a national level, the worst of the near term impact of the COVID-19 pandemic lockdown might be in the rearview mirror.
The fact that July 4 fell on a Saturday this year—opposed to Thursday last year—was responsible for some of the increase. There was a 49% upswing from the previous year when compared to the same week last year, according to the report.
Due to the strong purchase lock volume over the last three weeks, in conjunction with strong volume in weeks one through 13, compared to last year, the year-to-date volume‘s streaking 18% ahead.
Nevertheless, continuing to lag the national trend is much of the Northeast, Midwest, and West.
Last month, the average 30-year fixed-rate mortgage rose slightly, to 3.21%, in Freddie Mac’s most current Primary Mortgage Market Survey [2].
“The rebound in homebuyer demand continued this week, driven by mortgage rates that hover near record lows,” said Sam Khater, Freddie Mac’s Chief Economist. This turnaround in demand, he continued, particularly by those with higher incomes than the typical household, is another sign of deferred sales from the Spring.