Purchase Loan Applications Rise for Fifth Straight Week
Mortgage activity fell slightly this week, with overall applications dropping 2.6%. Refinances were down 6%, while purchase loans actually increased the same amount.
Purchase loan applications have been steadily rising over the last month. Six weeks ago, they were 35% below year-ago levels. Now, they’re just 1.5% under last year.
“Applications for home purchases continue to recover from April’s sizeable drop and have now increased for five consecutive weeks,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Government purchase applications, which include FHA, VA, and USDA loans, are now 5% higher than a year ago, which is an encouraging turnaround after the weakness seen over the past two months. As states gradually reopen and both homebuyer and seller activity increases, we will be closely watching to see if these positive trends continue, or if they reflect shorter-term, pent-up demand.”
Refinance activity, on the other hand, has started to wane, and refi applications are now at their lowest level since January. According to Kan, the drop is likely due to tougher lending standards and lessening availability of cash-out refinances.
“We still expect a strong pace of refinancing for the remainder of the year because of low mortgage rates,” Kan said. “With many homeowners still facing economic and employment uncertainty, these refinance opportunities will allow them to save money on their monthly payments, which can then be used to help other areas of their budgets.”
More in Mortgage News
- The FHFA announced that borrowers who have requested forbearance can still qualify for refinancing, as long as their forbearance period has ended and they’ve made three full monthly payments. The rule applies to all Fannie Mae- and Freddie Mac-backed loans.
- Fannie Mae released its latest forecast. According to the predictions, home sales will decline 15% across the year, while refinancing will see a 51% uptick over last year.
- More than 4 million homeowners are now in forbearance, accounting for 8.16% of all mortgage loans. The share is highest on Ginnie Mae-backed mortgages.
This Weeks’ Mortgage Rates
Rates largely held steady on all loan products this week, with slight increases and decreases here and there.
Here’s how they looked over the seven days”
- All 30-year, fixed-rate loans: 3.41%, 0.33 points
- Jumbo 30-year, fixed-rate loans: 3.66%, 0.37 points
- FHA 30-year, fixed-rate loans: 3.46%, 0.33 points
- 15-year, fixed-rate loans: 2.88%, 0.27 points
- 5/1 ARMs: 3.19%, -0.05 points
Check back here next week for the latest update on mortgage rates.
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