Record Low Rates: US Mortgage Demand Rises to 11-Year High
Buyers are rapidly returning to the housing market, lured by record low mortgage rates and a more pressing need than ever to “build a nest”, provoked by the coronavirus pandemic, writes CNBC.
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Mortgage applications for the purchase of housing increased by 4% in the second week of June compared with the previous week and were 21% higher than a year ago, according to the seasonally adjusted index of the Association of Mortgage Bankers. It was the ninth week of growth and the highest over the past 11 years.
“The housing market continues to experience pent-up demand since early this spring, as well as a gradual improvement in consumer confidence,” said MBA economist Joel Kahn.
On the subject: Is it worth refinancing a mortgage during a pandemic: expert advice
Buyers were also motivated by a new record low mortgage rate. The average contractual interest rate for 30-year fixed-rate mortgages with corresponding loan balances ($ 510 or less) decreased to 400% from 3,30%, with a decrease in points to 3,38 from 0,29 ( including commission for issuing) for loans with a down payment of 0,30%.
Lower rates have also stimulated demand for refinancing. The number of these applications increased by 10% per week and was 106% higher than a year ago. Refinancing has been dropping for several weeks, but new record low rates may have led some homeowners to potential savings.
“Refinancing continues to support household finances as homeowners who refinance can realize savings on their monthly mortgage payments during a period of uncertainty surrounding the economic recovery,” Kahn said.
On the subject: 7 US cities where it is most profitable to refinance a mortgage
The share of mortgage refinancing increased to 63,2% of the total number of applications from 61,3% in the previous week. With such low fixed interest rates, the share of mortgages with a regulated interest rate decreased to 2,8% of the total number of applications. ARM loans (floating rate mortgages) have lower rates, but higher risk.
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