The summer homebuying spree continues as buyers rush to apply for mortgages, CNBC reports. The COVID-19 pandemic and stay-at-home orders delayed the spring housing market and fueled pent-up demand that took off well into the summer, making “August the new April,” CNBC adds.
Mortgage applications to purchase a home inched up 0.4% last week compared to the previous week, and are now 33% higher than a year ago, the Mortgage Bankers Association reported Wednesday.
Low mortgage rates are adding to buyer urgency. The average contract interest rate for a 30-year fixed-rate mortgage fell to 3.11% last week, the MBA reports.
“The home purchase market remains a bright spot for the overall economy,” says Joel Kan, an MBA economist. “Mortgage rates at record lows and households looking for more space are driving this summer’s surge in demand.”
Meanwhile, applications to refinance are 34% higher than a year ago.
Offering an olive branch to refinancers, the Federal Housing Finance Agency announced Tuesday that it would delay implementation of a new loan refinance fee until Dec. 1. The fee, known as the “adverse market fee,” was originally slated to take effect in September. It will add a surcharge of 0.5% on mortgages backed by Fannie Mae and Freddie Mac that are refinanced into lower rates. That could result in up to $1,400 extra fee for homeowners refinancing an average $300,000 GSE-backed refinanced loan. The new fee does not apply to applications for home purchases. Read more.
“Extending the effective date will permit lenders to close refinance loans that are in their pipelines and honor the rate lock commitments they made to their borrowers, ensuring that economic relief in the form of record-low interest rates will continue to flow to consumers,” says MBA CEO Bob Broeksmit.