Record low mortgage rates last week may have offered up plenty of incentive for home buyers, even in a pandemic. Mortgage applications for home purchases increased 7% this week, which follows a 12% uptick last week, the Mortgage Bankers Association reports. Mortgage applications are viewed as a gauge for upcoming home sales.
This marks the third week in a row that purchase volume in mortgage applications has increased. The strongest growth in purchase applications was reported in Arizona, Texas, and California, the MBA reports.
The increase is occurring as half of the states in the U.S. have lifted some sheltering restrictions and have started to begin resuming more economic activity.
“Although purchase activity remains almost 19% below year-ago levels, this annualized deficit has decreased as more states reopen amidst the apparent, pent-up demand for home buying,” Mike Fratantoni, the MBA’s chief economist, says.
The MBA reported that the average contract rate on the 30-year fixed-rate mortgage fell to a record low of 3.4% last week.
But those low rates didn’t prompt a refinancing boom last week. The MBA’s index showed refinancing applications were down 2% last week compared to the previous week. The MBA says that many lenders lately are offering higher rates for refinances than for purchase loans.
Mortgage experts say that the decline in refinancing applications also may be due to the number of job losses from the pandemic that have restricted homeowners’ ability to apply for a new loan.