Homebuying slump worsens as applications for mortgage loans drop

Purchase applications fell by 3% in first week of November

National /
Nov.November 11, 2020 07:00 AM
(iStock)

(iStock)

As the vote counting in last week’s presidential election slowed down, so did mortgage applications.

An index tracking the number of mortgage applications to buy homes dropped 3 percent, seasonally adjusted, compared to the prior week.

The Mortgage Bankers Association’s weekly metric, known as the purchase index, has not increased in seven weeks. Joel Kan, head of industry forecasting for MBA, said the purchase index last week was at the lowest level since May.

The “recent slump” in homebuyer activity, as Kan put it, comes despite interest rates sliding to another all-time low. The average 30-year, fixed-rate mortgage rate fell to 2.98 percent from 3.01 percent the week before. Jumbo rates declined to 3.13 percent from 3.18 percent.

Rising prices may be discouraging potential home shoppers.

“Inadequate housing supply is putting upward pressure on home prices and is impacting affordability — especially for first-time buyers and lower-income buyers,” Kan said in a statement.

Home prices have skyrocketed in recent months, driven by strong demand and low supply. MBA’s survey, which has been running weekly since 1990, follows 75 percent of the residential mortgage market. This year the average loan size has reached record highs on multiple occasions.

Pointing to those housing bellwethers, Kan noted that buyer activity “in the upper end of the market” remains strong. The purchase index, unadjusted, is up 16 percent year-over-year, he added.

MBA’s refinance index increased by 1 percent compared to the previous week, though it was up 67 percent year-over-year. That’s a lower rate of growth than in the final week of October when the index jumped by 6 percent.

Despite refinance applications making up 70 percent of the mortgages MBA’s survey tracks, the purchase index’s decline pulled down MBA’s overall index, which encompasses all home loan applications, by 0.5 percent, seasonally adjusted.





    Related Articles

    arrow_forward_ios
    Former J. Crew CEO Mickey Drexler and 760 N Walnut Ave, Ketchum (Getty; Realtor)

    Former J. Crew CEO Mickey Drexler sells Idaho estate

    Former J. Crew CEO Mickey Drexler sells Idaho estate
    Singapore (iStock)

    Singapore luxury market rebounds despite fewer foreign buyers

    Singapore luxury market rebounds despite fewer foreign buyers
    The total supply of single-family homes declined 40 percent to 3.3 months in October (iStock)

    Single-family home sales dip in October, but up 41% from last year

    Single-family home sales dip in October, but up 41% from last year
    (iStock)

    Mortgage requests surge ahead of Thanksgiving

    Mortgage requests surge ahead of Thanksgiving
    Vanke US managing director Kai-yan Lee, RFR’s Aby Rosen and 100 East 53rd Street (Photos via Foster + Partners and Getty)

    Vanke seeks to remove RFR from Midtown condo project

    Vanke seeks to remove RFR from Midtown condo project
    Hippo founders Assaf Wand and Eyal Navon (LinkedIn)

    Home insurance startup Hippo raises $350M

    Home insurance startup Hippo raises $350M
    Prices increased 6.6 percent year-over-year in September (iStock)

    US home prices surged 6.6% in September

    US home prices surged 6.6% in September
    From left: Edison Properties CEO Robert Selsam, Ironstate Development's Michael Barry, Stellar Management founder Larry Gluck (LinkedIn; Gluck Family Foundation)

    These developers could benefit the most from Soho’s rezoning

    These developers could benefit the most from Soho’s rezoning
    arrow_forward_ios

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

    Loading...