Homebuying demand remains stronger in 2020 than in the previous year, according to mortgage purchase application data released Wednesday by the Mortgage Bankers Association (MBA).
While total mortgage applications fell two percent week over week, new purchase applications spiked 28 percent year over year.
“Purchase applications were essentially unchanged over the week and were 28 percent higher than a year ago — the 15th straight week of year-over-year increases,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement. “Lenders are reporting that the strong demand for homebuying is coming from delayed activity from the spring, as well as households seeking more space in less densely populated areas.”
While demand continues to be strong, Odeta Kushi, the deputy first economist at First American, pointed out on Twitter that prospective buyers can’t buy what isn’t for sale and the mad rush for homes is being constrained by the ability to find one for sale.
MBA’s refinance index decreased 3 percent from the prior week, but was still 40 percent higher than one year ago. Refinance applications made up 62.5 percent of total applications, down from 62.6 percent the previous week.
“Both conventional and government refinancing activity decreased last week, despite 30-year fixed and 15-year fixed mortgage rates declining to near historical lows,” Kan said. “Mortgage rates have remained below 3.5 percent for five months now, and it’s possible that refinance demand may be slowing and will not significantly increase again without another notable drop in rates.”