Home-purchase loan requests rise for third straight week

Application volume flat overall as refinancing ebbs

TRD NATIONAL /
May.May 06, 2020 08:00 AM
Mortgage Banker Association’s weekly index shows another increase in purchase applications for home loans during the last week of April 2020. (Credit: iStock)

Mortgage Banker Association’s weekly index shows another increase in purchase applications for home loans during the last week of April 2020. (Credit: iStock)

An index tracking mortgage applications to buy single-family homes gained 6 percent, seasonally adjusted, last week from the week before. It was the third straight weekly increase, and a sign of life in a residential market depressed by the coronavirus.

The Mortgage Bankers Association’s metric, called the purchase index, had jumped by 12 percent the previous week and by 3 percent the week before that. Arizona, Texas and California powered last week’s gains. However, purchase-loan applications remain 19 percent lower than at the same time last year.

Home loan applications overall were flat for the week ending May 1 because refinancing requests, which accounted for 7 of every 10 home-loan applications, took another step back.

But refinance applications were still 210 percent greater than they were a year ago, thanks in part to a 3.40 percent interest rate for 30-year mortgages of $510,400 or less — a record low for the trade group’s weekly survey, which dates back to 1990. The rate for jumbo loans was 3.69 percent. Both rates fell by 3 basis points.

The survey of mortgage bankers, commercial banks and thrifts covers more than three-quarters of U.S. retail residential mortgage applications, according to the trade group.

Mike Fratantoni, MBA’s chief economist, said refinance applications dropped because refinance rates are often higher than for purchase loans. Some lenders have also stopped giving cash-out refinance loans “because of their inability to sell them to Fannie Mae and Freddie Mac.”

Home prices have not collapsed, despite demand falling, because many sellers have pulled their homes off the market or declined to list them because of the pandemic, while others have refused to lower their asking prices, believing interest will pick up as states reopen.

Last week’s survey showed purchase applications — not seasonally adjusted — were up 10 percent in California, 9 percent in New York and 3 percent in Washington state from the previous week. But they were down 31 percent, 51 percent and 38 percent, respectively, from a year ago.

 

Related Articles

arrow_forward_ios
Home sale price declines are expected for July, after a recent bump, according to a CoreLogic report. (iStock)

Home sale prices got a bump, but a drop is coming: Report

Home sale prices got a bump, but a drop is coming: Report
The weekly survey tracking purchase loans saw a seasonally adjusted decline of 2 percent in the final week of July. (iStock)

Home loan applications fall again amid tight credit rules, weak job market

Home loan applications fall again amid tight credit rules, weak job market
Cash-strapped mortgage borrowers are paying off credit cards and other consumer debt instead because those bills are lower (iStock)

TRD Insights: More homeowners are skipping mortgage payments in favor of credit card bills

TRD Insights: More homeowners are skipping mortgage payments in favor of credit card bills
(iStock)

TRD Insights: Homebuyers in Black communities charged higher mortgage rates, report finds

TRD Insights: Homebuyers in Black communities charged higher mortgage rates, report finds
Dan Gilbert (Getty, iStock)

Parent of Quicken Loans, Rocket Mortgage seeks $3.3B in IPO

Parent of Quicken Loans, Rocket Mortgage seeks $3.3B in IPO
New York Rep. Alexandria Ocasio-Cortez, President Donald Trump and HUD Secretary Ben Carson (Getty)

AOC seeks to block Trump’s recent effort to roll back fair housing rule

AOC seeks to block Trump’s recent effort to roll back fair housing rule
Fears over a second wave of coronavirus infections and the wait-and-see for the next round of government relief has led U.S. homebuyers to hit pause. (iStock)

Mortgage applications fall as fears of second wave rise

Mortgage applications fall as fears of second wave rise
Beijing

Falling rents in China a sign of economic uncertainty

Falling rents in China a sign of economic uncertainty
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...