Mortgage refinancings hit highest level since mid-August

Low interest rates gave the refi market a boost last week, while purchase activity fell, according to MBA

National /
Oct.October 07, 2020 07:00 AM
(iStock)

(iStock)

Homeowners rushed to refinance last week as mortgage rates fell, while applications from prospective homebuyers slowed.

The Mortgage Bankers Association’s refinance index increased 8 percent, seasonally adjusted, in the first week October, compared to the prior week. That’s highest level the index has reached since mid-August, and that figure marks a 50 percent year-over-year increase.

Joel Kan, MBA’s head of industry forecasting, attributed the surge to falling mortgage rates.

The rate for a 30-year, fixed-rate mortgage fell to 3.01 percent, down 4 basis points from 3.05 percent the prior week. Jumbo rates slipped to 3.31 percent from 3.33 percent.

MBA’s index tracking the number of applications to buy homes last week dropped 2 percent, seasonally adjusted, compared to the week previous. The metric, known as the purchase index, was still up 21 percent year over year, however. It’s the 20th consecutive week the index posted annual growth.

Kan noted that the average size of a purchase loan hit an all-time record last week of $371,500, up from $370,700 the prior week.

He said that rising home prices and an historic low levels of inventory, layered with the pandemic’s disproportionate effect on lower-income households, is driving away homebuyers at the lower-end of the market. As a result, the market is made up of those willing and able to pay more, while “lower price tiers are seeing slower growth, which is contributing to the rising trend in average loan balances,” Kan explained.

MBA’s index tracking all home loans increased 4.6 percent, seasonally adjusted, driven by the swell of refinancing applications, which accounted for 65 percent of last week’s survey.

MBA’s weekly survey of the 75 percent of the residential mortgage market has been running since 1990.





    Related Articles

    arrow_forward_ios
    Disappearing starter homes
    New York City’s incredible shrinking starter home market
    New York City’s incredible shrinking starter home market
    (Photo Illustration by Steven Dilakian for The Real Deal)
    Luxury housing market took its biggest dive in 10 years
    Luxury housing market took its biggest dive in 10 years
    (Illustration by Priyanka Modi for the Real Deal with Getty)
    Contract signings for NYC homes diminish, as do new listings
    Contract signings for NYC homes diminish, as do new listings
    (Photo Illustration by The Real Deal with Getty Images)
    Mortgage rates jump, but so do applications
    Mortgage rates jump, but so do applications
    (Photo Illustration by Steven Dilakian for The Real Deal with Getty Images)
    Flood-risk data shifted homebuyers’ searches, bids
    Flood-risk data shifted homebuyers’ searches, bids
    rent control, Europe, housing market
    Swedish rent control pushes tenants into long waits, sketchy sublet market
    Swedish rent control pushes tenants into long waits, sketchy sublet market
    Compass' Adrianna Nava (Getty, Compass)
    Hamptons listings gain, but inventory still scarce and sales brisk
    Hamptons listings gain, but inventory still scarce and sales brisk
    Residential Real Estate, Housing Market, Fannie Mae
    Sentiment sinks deeper as market sidelines buyers and sellers
    Sentiment sinks deeper as market sidelines buyers and sellers
    arrow_forward_ios

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

    Loading...