Mortgage applications to buy homes reach highest level since January

The upward trend may not continue because of high unemployment rates and low supply, MBA previously cautioned

The first week of June also saw refinance activity pick up again after a seven-week decline. (iStock)
The first week of June also saw refinance activity pick up again after a seven-week decline. (iStock)

The number of homebuyers applying for loans last week reached levels not seen since January.

The purchase index, an adjusted weekly metric tracked by the Mortgage Bankers Association, rose 5 percent last week, compared to the final week of May, and 13 percent year over year. That rounds out eight consecutive weeks of growth and marks a new high in adjusted purchase activity for 2020.

The first week of June also saw refinance activity pick up again after a seven-week decline.

MBA’s adjusted refinance index, which tracks the volume of refinancing applications, also increased by 11 percent last week and 80 percent year over year.

The uptick represents a reversal in nearly two months of declining refinance activity, which last week accounted for about 61 percent of all loan activity.

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Joel Kan, MBA’s executive at the helm of industry forecasting, attributed last week’s uptick in activity to low mortgage rates, states reopening and “pent-up demand” from earlier in the spring as the pandemic froze many housing markets.

After the final week of May, Kan had cautioned that home purchase activity may not continue to grow due to high rates of unemployment and low housing supply. The purchase index increased by 5 percent that week, compared to the prior week’s 9 percent gain.

Last week, the 30-year fixed-rate mortgage rate for conforming loans of $510,400 or less ticked up to 3.38 percent from 3.37 percent the prior week. Jumbo rates also increased to 3.70 percent from 3.66 percent.

MBA’s overall adjusted index, which tracks 75 percent of the U.S. consumer mortgage market, increased by just over 9 percent, a large jump compared to prior weeks’ marginal increases as purchase and refinance activity diverged.

Write to Erin Hudson at ekh@therealdeal.com