Homebuyers seem to have an insatiable appetite for new and existing homes, and are applying for mortgages at an incredible rate.
Mortgage applications for buying a home last week rose just 0.4% from the previous week, but were remarkably 33% higher than a year ago, according to the Association of Mortgage Bankers.
August is the new April, thanks to the coronavirus pandemic. Expected demand from the disastrous spring market and the new mind-at-home mentality combine to send more consumers in a hurry to buy or upgrade homes for the first time to what they already have.
Low mortgage rates only add fuel to the fire. The average mortgage rate for 30-year fixed rate with compliant loan balances dropped to $ 510,400 to 3.11% from 3.13%. Points, including the original fee, increased to 0.38 from 0.36 for loans with a 20% down payment.
“The home market remains a bright spot for the overall economy,” said Joel Kan, an MBA economist. “Mortgage rates at record lows and households looking for more space are driving demand this summer.”
Applications to refinance a home loan fell 10% for the week, but were 34% higher annually. The refinancing market has been sluggish since rates made a dramatic move higher two weeks ago and then fell back only slightly. The share of mortgage refinancing activity dropped to 62.6% of total applications from 64.6% the previous week, according to the MBA’s seasonally adjusted report.
That spike in rates was due in part to a recent announcement by Fannie Mae and Freddie Mac that they were specifically raising loan fees on refinances, beginning in September.
“The fee is needed to cover projected COVID-19 losses of at least $ 6 billion at the Enterprises,” according to a release from the FHFA, which oversees the two mortgage crosses.
However, amid heavy pressure from the mortgage industry, the FHFA announced at the end of Tuesday a delay in the start date until 1 December.
“Extending the expiration date will allow lenders to close refinancing loans that are in the pipelines and honor the commitment commitments they made to their lenders, and ensure that economic relief in the form of record low interest rates will continue to the consumer is flowing, “said MBA CEO Bob Broeksmit.
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