Loan applications to buy homes rise for fifth week

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

TRD 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
The Shellfisher Preserve, which is supported by the Peconic Bay Community Preservation Fund (Peconic Land Trust)

East End sales yield record haul for land trust

East End sales yield record haul for land trust
There’s an exodus from NYC. But can it last?

There’s an exodus from NYC. But can it last?

There’s an exodus from NYC. But can it last?
Westchester County (Credit: iStock)

Before Ides of March, Westchester home sales were growing

Before Ides of March, Westchester home sales were growing
19-acre private island in New Jersey seeks $200K

19-acre private island in New Jersey seeks $200K

19-acre private island in New Jersey seeks $200K
Marie-Chantal Miller, the Crown Princess of Greece, and her husband Pavlos, the Crown Prince with 385 Great Plains Rd, Southampton, NY  (Credit: Getty Images)

Royal couple buys sprawling Southampton mansion

Royal couple buys sprawling Southampton mansion
Fotis Dulos (AP Images/ Erik Trautmann)

Litigation, foreclosure cases complicate Fotis Dulos estate

Litigation, foreclosure cases complicate Fotis Dulos estate
Westhampton waterfront home listed with a 35-foot boat

Westhampton waterfront home listed with a 35-foot boat

Westhampton waterfront home listed with a 35-foot boat
Amagansett house inspired by Bauhaus movement listed

Amagansett house inspired by Bauhaus movement listed

Amagansett house inspired by Bauhaus movement listed
arrow_forward_ios

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

Loading...