Applications for mortgages continue to increase
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Usually this is the time of year when we start to see homebuying slow down for the peak summer months, but not this year. Not even close. This past week the applications for purchasing a home were 19.1% higher than they were a year ago, according to the weekly report from the Mortgage Bankers Association. This is a 2% increase from one week prior, which had shown a slight post-holiday decrease of about 5%, so it is clear applications are still showing strong increases as the summer gets in to full swing.
Refinances continue to drive the bulk of activity, with 64% of last week’s applications coming from the refinance segment. This is a 5% weekly gain, which is 122% higher than a year ago. For both purchase and refinance applications the overwhelming majority were for fixed-rate loans since the adjustable-rate made up only 3% of total applications, which was the same market share as the week before. Given all signs pointing to interest rates staying low, it is going to be a long time before adjustable rate mortgages come back into style.
Last year around this time rates were just under 4%, but now they have nudged under 3% for credit-worthy buyers and are still only slightly above 3% on average. Buyers or refinancers will save at least several thousand dollars a year on most loans. These rates are at historical record lows and are the main reason the housing market has maintained activity even in the wake of high unemployment numbers.