Weekly Mortgage Demand Up

Last week because of a sharp drop in mortgage interest rates resulted in homeowners and potential homebuyers rushing to their lenders.

According to the Mortgage Bankers Association’s seasonally adjusted index, the total mortgage application volume rose 8.6% compared to the previous week.  

Since the end of February, this is the first overall increase in weekly applications.

With a 20% down payment a 30-year fixed-rate mortgages with conforming loan balances of $548,250 or less the average contract interest rate decreased from 3.27% to 3.20%, with points increasing from 0.33 to 0.36 (including the origination fee). A year ago that rate was 25 basis points higher.

Homeowners jumped in to take advantage of the potential savings. 

For the week the applications to refinance a home loan jumped 10% but were still 23% lower compared to the previous year. 

There was an increase in the refinancing share of mortgage activity from 59.2% in the previous week to 60% of total applications.

MBA’s associate vice president of economic and industry forecasting Joel Kan said that in around two months the mortgage rates dropped to their lowest levels, initiating a small upturn in refinancing activity after six weeks of decrease. 

This resulted in borrowers taking action resulting in rising in both conventional and government refinance applications.

This week there was a 6% increase in mortgage applications to purchase a home. and it was 57% higher than in 2020. 

It would be incorrect to do an annual comparison because the housing market essentially ground to a halt last year for the first two months of the pandemic and then bounced back dramatically at the beginning of last summer.

Kan said, MBA expects the purchase market to remain strong, as the average loan size for purchase applications increased after a few weeks of declines, due to fewer homes available for sale it has accelerated the home-price.