Purchase Loan Activity Rebounds as Mortgage Rates Drop
Mortgage activity slowed slightly this week, but not in the way you’d expect. Unlike in past weeks, it wasn’t purchase applications that declined this time. Instead, refinance activity dropped, decreasing 7% over the week. To be fair, refinancing is still up a whopping 218% over the year.
Purchase loan activity actually jumped in the last week, rising 12% for the week. It’s the largest volume of purchase applications seen in almost a month, and according to Joel Kan, associate vice president of economic and industry forecasting at the Mortgage Bankers Association, it may be a sign of good things to come.
“The 10 largest states had increases in purchase activity, which is potentially a sign of the start of an upturn in the pandemic-delayed spring home buying season, as coronavirus lockdown restrictions slowly ease in various markets,” Kan said. “California and Washington continued to show increases in purchase activity, with New York seeing a significant gain after declines in five of the last six weeks.”
California saw a 17.2% uptick in purchase applications, while Washington and New York saw 16.1% and 13.7% jumps, respectively. Altogether, purchase loans made up nearly 29% of all loan activity this week — up from just 24.6% the week prior.
According to Kan, the increase in purchase activity can largely be attributed to decreasing mortgage rates. The MBA’s weekly lender survey shows that 30-year, fixed-rate mortgages averaged a 3.43% rate in the last week.
More in Mortgage News
- The total share of mortgage loans in forbearance hit nearly 7% this week. Forbearance rates are highest on FHA and VA loans, 10% of which are currently in forbearance.
- Fannie Mae and Freddie Mac announced that borrowers in forbearance will not need to make lump sum payments once those relief periods end.
- The Census Bureau announced that the rate of homeownership in the US increased over the last quarter, jumping to 65.3%. That’s a 1.1% jump over Q4 2019.
The Week in Mortgage Rates
Interest rates either dropped or held steady on all loan products, except for FHA loans. FHA loans saw rates increase slightly for the week.
Here’s a quick look at what interest rates looked like by loan product:
- All 30-year, fixed-rate loans: 3.43%, 0.34 points
- Jumbo 30-year, fixed-rate loans: 3.72%, 0.33 points
- FHA 30-year, fixed-rate loans: 3.39%, 0.20 points
- 15-year, fixed-rate loans: 2.98%, 0.28 points
- 5/1 ARMs: 3.29%, 0 points
Rates are always in flux, especially considering the current economic climate. Be sure to check back next week for the latest mortgage rate data.
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