Mortgage purchase applications rose 5 percent last week while overall mortgage applications fell by 3.9 percent, according to new data released Wednesday by the Mortgage Bankers Association’s (MBA).
The week, from May 22 to May 29, includes the Memorial Day holiday and shows that the housing market has recovered in bursts in the wake of the coronavirus outbreak. Mortgage purchase applications are up 18 percent year-over-year while refinance applications are down 9 percent but 13 percent higher than the same week a year ago. Six weeks ago, mortgage purchase applications applications were 35 percent year-over-year.
“The pent-up demand from homebuyers returning to the market continues to support a recovery from the weekly declines observed earlier this spring,” Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, said in a prepared statement. “However, there are still many households affected by the widespread job loss and current economic downturn. High unemployment and low housing supply may restrain a more meaningful rebound in purchase applications in the coming months.”
Purchase applications are up for the third week in a row — 9 percent in the third week of May and 6 percent for the week before that. The average contract interest rate for 30-year fixed-rate mortgages of up to $510,400 fell to 3.37 percent from 3.42 percent. The average contract interest rate for 30-year fixed-rate mortgages of more than $510,400 fell to 3.66 percent from 3.71 percent.
“In contrast to the upswing in purchase activity, refinance applications fell for the seventh consecutive week – even as the 30-year fixed rate hit another MBA survey-low of 3.37 percent,” Kan said. “After reaching a peak of 76 percent 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.”