Mortgage Applications Skyrocket As Housing Market Rebounds
Homebuyer mortgage applications surged as June turned into July, in yet another sign of the housing market’s surprisingly strong rebound after the coronavirus-triggered shutdown this spring.
The number of mortgage applications from homebuyers shot up 33 percent in the week ending on July 3 compared to the same period a year ago, the Mortgage Bankers Association (MBA) reported in its weekly survey.
The number of purchase applications also jumped 5 percent over the previous week in June, the MBA said.
“Purchase applications continued their recovery, increasing 5 percent to the highest level in almost a month and 33 percent from a year ago,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting, in a press release.
The jump in mortgage applications comes as housing prices continue their upward march in many markets across the United States, surprising some industry experts who had expected the housing market to stumble in the wake of the coronavirus shutdown.
However, the biggest challenge facing prospective homebuyers appears to be a dearth in inventory, with the coronavirus crisis having prompted some sellers to pull listings in what was already a tight market.
That has increased competition for available homes, with the average mortgage size increasing to $365,700 to reflect the rise in prices, the MBA noted.
Buyers – and current homeowners looking to refinance – have also been tempted by a sharp decline in interest rates, Kan noted. They had already fallen in the spring after the coronavirus hit, and then fell again in late June as reports of rising infection rates poured in from the Sunbelt states.
“Mortgage rates declined to another record low as renewed fears of a coronavirus resurgence offset the impacts from a week of mostly positive economic data,” Kan noted. “The 30-year fixed rate slipped to 3.26 percent, down 53 basis points since late March. Borrowers acted in response to these lower rates.”