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 08:00 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
    Aerial Shot of a Suburban Street in San Fernando Valley (Getty)
    San Fernando Valley home prices top another record in May
    San Fernando Valley home prices top another record in May
    (iStock)
    SoCal home prices keep rising while supply dwindles
    SoCal home prices keep rising while supply dwindles
    PG&E CEO Patricia K. Poppe, San Diego Gas & Electric CEO Caroline Winn and Southern California Edison CEO Kevin M. Payne. (Getty, PG&E, SDGE, Edison)
    PG&E among utilities looking to cut subsidies on solar homes
    PG&E among utilities looking to cut subsidies on solar homes
    (iStock)
    Did pandemic really trigger mass exodus from California?
    Did pandemic really trigger mass exodus from California?
    (iStock)
    Southern California housing rush was unabated in January
    Southern California housing rush was unabated in January
    Orange County, CA (iStock)
    SoCal home sales prices and volume surge
    SoCal home sales prices and volume surge
    Affirmed Housing CEO James Silverwood and the development site (Affirmed, Google Maps)
    Affordable developer proposes complex in Chatsworth
    Affordable developer proposes complex in Chatsworth
    About 3.5% of LA and Orange Counties homes were 90 days past due in June
    In SoCal, “seriously delinquent” mortgages are on the rise
    In SoCal, “seriously delinquent” mortgages are on the rise
    arrow_forward_ios

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

    Loading...