The end of August usually marks the beginning of the slow season for housing, but as with everything else, this year’s trends are like no other.
Mortgage applications to purchase a home rose 3% last week from the previous week and were a stunning 40% higher from a year ago, according to the Mortgage Bankers Association’s seasonally adjusted index. The year-on-year comparison is usually in single digits. While it may have been skewed slightly by the Labor Day holiday,which fell earlier last year, purchase demand is still running significantly higher than a year ago.
Buyers are still getting significant incentive from low mortgage rates. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances up to $510,400 fell to 3.07% from 3.08%, with points remaining unchanged at 0.36, including the origination fee, for loans with a 20% down payment.
For the 15-year fixed, the rate declined to a record low of 2.62% on conventional loans.
“There continues to be resiliency in the purchase market,” said Joel Kan, an MBA economist. “The average loan size continued to increase, hitting a survey high at $368,600. Highlighting the strong overall demand for buying a home, conventional, VA and FHA purchase applications all increased last week.”
Applications to refinance a home loan rose 3% for the week and were 60% higher than a year ago. Refinance volume has been extremely high since rates plummeted last March, but the pool of borrowers who haven’t already taken advantage of these low rates is shrinking.
The refinance share of mortgage activity increased to 63.1% of total applications from 62.5% the previous week. The adjustable-rate mortgage share of activity decreased to 2.2% of total applications.
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