Mortgage applications rebounded sharply last week as homebuyers returned to the market
- Applications to purchase a home increased 6% from the previous week, according to a Wednesday reading of the Mortgage Bankers Association's seasonally adjusted index.
- The index is only 1.5% lower than it was at last year, a sharp rebound as it was down 35% on the year just six weeks ago.
- Still, refinancing applications slid 6% on the week, even with record low
- "With many homeowners still facing economic and employment uncertainty, these refinance opportunities will allow them to save money on their monthly payments, which can then be used to help other areas of their budgets," said Joel Kan, MBA's associate vice president of economic and industry forecasting.
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There are signs of life in the
Applications to purchase a home increased 6% from the previous week, according to a Wednesday reading of the Mortgage Bankers Association's seasonally adjusted index. The purchase applications are only 1.5% lower than last year, a sharp rebound for the index, which six weeks ago was 35% lower on the year.
"Applications for home purchases continue to recover from April's sizable drop and have now increased for five consecutive weeks," said Joel Kan, MBA's associate vice president of economic and industry forecasting, in a statement.
"Government purchase applications, which include FHA, VA, and USDA loans, are now 5 percent higher than a year ago, which is an encouraging turnaround after the weakness seen over the past two months," he said.
Homebuyers have been returning — with masks— to the market as some states begin to slowly reopen from shutdowns. In addition, record-low mortgage rates have added an extra incentive for some to purchase a home now. Still, it remains to be seen if the trend continues or reflects shorter-term, pent-up demand, according to Kan.
Current homeowners do not appear to be taking advantage of low rates at the moment. The refinance index fell 6% from a week ago and is up 160% on the year.
"Despite mortgage rates remaining close to record-lows, refinance activity slid to its lowest level in over a month," said Kan. Still, the MBA expects a strong pace of refinancing for the remainder of the year, driven by low mortgage rates.
"With many homeowners still facing economic and employment uncertainty, these refinance opportunities will allow them to save money on their monthly payments, which can then be used to help other areas of their budgets," Kan said.
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