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.