One of the few bright spots in the nation’s ailing economy is the housing market. Fueled by the lowest home loan rates in the nation’s history, mortgage applications increased 18 percent for the week ending May 29 compared to the same week one year ago, according to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.
Last week’s home loan applications were up 5 percent compared to the previous week, representing the seventh consecutive week of rising numbers. The uptick of homebuyers securing mortgages follows the COVID-19 pandemic that surged in April, when applications fell by 35 percent year over year.
“Purchase applications continued their recent ascent,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “The pent-up demand from homebuyers returning to the market continues to support a recovery from the weekly declines observed earlier this spring.”
At 3.15 percent, the 30-year fixed-rate mortgage again hit the lowest level in the near-50-year history of Freddie Mac’s survey, breaking the record for the third time in the last few months.
For buyers who prefer a15-year fixed mortgage, the rate was 2.62 percent. Both kinds of home loans carry points and fees at 0.8 percent and 0.7 percent, respectively.
“These unprecedented rates have certainly made an impact as purchase demand rebounded…” Freddie Mac said in a statement.
Despite the rock-bottom rates, and in contrast to the upswing in home purchase loans, refinancing fell for the seventh consecutive week. After reaching a peak of 76 percent earlier this year, refinances account for less than 60 percent of all home loan activity. The refinance share of mortgage activity slipped to 59.5 percent of total applications from 62.6 percent the previous week.
“There are still many households affected by the widespread job losses and current economic downturn,” Kan said. “High unemployment and low housing supply may restrain a more meaningful rebound in purchase applications in the coming months.”
The survey, which covers more than 75 percent of all U.S. retail residential mortgage applications, has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.