Loan applications to buy homes rise for fifth week

Refinancing applications plunged to lowest level in over a month: report

National /
May.May 20, 2020 07:00 AM
(Credit: iStock)

(Credit: iStock)

Prospective homebuyers are continuing to come out of the woodwork to apply for purchase loans.

For the fifth consecutive week, a seasonally adjusted index that tracks mortgage applications to buy single-family homes increased from the prior week.

The purchase index, produced and tracked weekly by the Mortgage Bankers Association, reported a 6 percent gain after rising by 11 percent and 12 percent in the previous two weeks.

MBA’s refinance index, on the other hand, reported its fifth consecutive weekly decline. Seasonally adjusted refinancing applications fell by 6 percent compared to the prior week, when the index fell 3 percent. Refinancing activity last week was at its lowest level in more than a month, according to MBA — but still 160 percent higher than the same period last year.

The drop in refinancing requests pushed MBA’s overall adjusted index tracking home loan applications down 2.6 percent. It was flat for the past two weeks as refinancing applications ebbed.

MBA’s overall index tracks 75 percent of the U.S. home loan market. Refinancings represent the bulk of the applications, though their share has been sliding since mid-April. Last week, refinancings accounted for 64 percent of home-loan activity, down from 67 percent the week before.

Joel Kan, MBA’s executive at the helm of industry forecasting, said the average loan amount for refinancing applications also hit its lowest level last week since January: $299,400.

Kan said that could mean, in part, that “the drop was attributable to a retreat in cash-out refinance lending as credit conditions tighten.”

JPMorgan Chase tightened its lending standards in mid-April and paused all applications for cash-out refinancing, citing economic uncertainty.

Despite the slowdown, Kan said that he expects that low interest rates will continue to drive strong refinancing activity.

The average contract interest rate for a 30-year mortgage of $510,400 or less was 3.41, a 2-basis-point drop from the prior week. The rate for jumbo loans fell to 3.66, a decrease of 3 basis points.

Kan said the low rates drove up purchase activity across all loan types, calling it an “encouraging turnaround,” though he said the increases may be related to purchases that were delayed, rather than a true uptick in prospective homebuyers.

“As states gradually re-open and both home buyer 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,” he said.

Write to Erin Hudson at [email protected]


Related Articles

arrow_forward_ios
(iStock)
Rents in New York and South Florida metros surged more than 30%, led nationwide rise
Rents in New York and South Florida metros surged more than 30%, led nationwide rise
Princeton proud: Eric Schmidt reportedly bidding to save club
Princeton proud: Eric Schmidt reportedly bidding to save club
Princeton proud: Eric Schmidt reportedly bidding to save club
Children’s Magical Garden at at 157 Norfolk Street (Google Maps, Facebook)
Children’s Magical Garden claps back against developer who claimed defamation
Children’s Magical Garden claps back against developer who claimed defamation
432 Park pad trades for $26M, supertall’s priciest deal since 2019
432 Park pad trades for $26M, supertall’s priciest deal since 2019
432 Park pad trades for $26M, supertall’s priciest deal since 2019
25 Park Avenue in Larchmont (WilliamPitt)
Estate famed for turtle soup has new distinction: $11M sale price
Estate famed for turtle soup has new distinction: $11M sale price
Travis Soukup and Yongxing Deng with Fifth Wall's Brendan Wallace (Aloft/Zack Phillips, Jeff Newton, iStock)
Appraisal startup Aloft closes $20M Series A led by Fifth Wall
Appraisal startup Aloft closes $20M Series A led by Fifth Wall
1439 Ocean Avenue in Brooklyn (Google Maps)
New York’s “worst landlord” pays the piper in $235K city settlement
New York’s “worst landlord” pays the piper in $235K city settlement
Now streaming: TRD’s podcast Deconstruct on what’s next for Surfside
Now streaming: TRD’s podcast Deconstruct on what’s next for Surfside
Now streaming: TRD’s podcast Deconstruct on what’s next for Surfside
arrow_forward_ios

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

Loading...