More home buyers are applying for loans, and they’re ready to close. Mortgage applications to purchase a home increased 5% last week and are now 33% higher than a year ago, the Mortgage Bankers Association reported Wednesday.
Record low mortgage rates last week prompted a spike in activity. Home buyer demand has proven strong since mid-May as some states started to reopen after sheltering in place to slow the COVID-19 outbreak. Buyers reemerged and are rushing to take advantage of low mortgage rates. The MBA reported the average contract interest rate for a 30-year-fixed-rate mortgage dropped to 3.26% last week.
“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, such as June factory orders and payroll employment,” says Joel Kan, an MBA economist.
The average purchase loan size rose to a high of $365,700, as borrowers contend with limited supply and higher home prices, Kan says.
Meanwhile, refinance activity last week nudged up just 0.4% from the previous week. Refinance applications, however, are sill 111% higher than a year ago. The MBA notes that refinancings are likely more muted because mortgage rates have been low for so long that many borrowers may have already taken advantage and refinanced to lock in lower monthly mortgage payments.