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Record Low Mortgage Rates Increase Homebuyer Demand Thirty-Three Percent

Record Low Mortgage Rates Increase Homebuyer Demand Thirty-Three Percent

The pandemic shut-in is lifting and potential homebuyers are starting to branch out and look for a new home. With the shut-in lifting and record-low mortgage rates, the Mortgage Bankers Association’s index reported a 33% increase in homebuyers than this time last year. The report also showed that mortgage applications to purchase a new home rose 5% the first week in July. Homebuyers’ demand has been impressively strong since Mid-May.

“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,” said Joel Kan, an MBA economist. “The average purchase loan size increased to $365,700 — also another high — as borrowers contend with limited supply and higher home prices.”

This is great news for home prices as they are continually accelerating but with low mortgage rates, homebuyers are able to afford more home. According to data collected, ” the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of up to $510,400 dropped to 3.26% from 3.29%.” Loans with a 20% down payment reported points dropped to 0.35 from 0.36.

As far as applications to refinance a home loan, rose 0.4% from the week ending in June and increased 111% from a year ago. Usually mortgage applications to refinance follow the weekly rate moves. Matthew Graham, chief operating officer at Mortgage News Daily, expresses that the prediction of the housing market is tough. Those in the industry are watching very closely and are on high alert for any signs of a drastic change because of another major coronavirus headline.

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