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Are Homebuyers Stepping Back Into the Market?

05.27.2020

According to the latest weekly survey conducting by Mortgage Bankers Association (MBA) for the week ending on May 22, spring has brought a surge in mortgage applications to the housing industry. 

The MBA revealed that the number of mortgage applications rose 2.7% from the prior week’s statistics.

This weekly survey, known as the Market Composite Index, measures the volume of mortgage loan applications on a weekly basis. This 2.7% shows the seasonally adjusted amount, while unadjusted results reveal a 3% rise from the previous week.

As for the Refinance Index, MBA’s report divulged a decrease of 0.2% within the same week’s time frame, while the Purchase Index (seasonally adjusted) was shown to have risen 9%. When unadjusted, the Purchase Index revealed a rise of 7%. 

Joel Kan, MBA’s AVP of Economic and Industry Forecasting, commented on this week’s rise in applications: "The housing market is continuing its path to recovery as various states reopen, leading to more buyers resuming their home search. Purchase applications increased 9% last week—the sixth consecutive weekly increase and a jump of 54% since early April. Additionally, the purchase loan amount has increased steadily in recent weeks and is now at its highest level since mid-March.”

Kan added even more details that point to hope on the horizon: "Despite mortgage rates hovering near MBA's all-time survey low, refinance activity was essentially flat but still 176% higher than last year. Conventional refinance applications increased 2%, while government refinancing was down almost 7%.”

Further details in the report state the refinance share of mortgage activity, which fell to 62.6% of total applications (the previous week was at 64.3%). As for the adjustable-rate mortgage (ARM) share of activity, that rose to make up 3.4% of all placed applications.

Odeta Kushi, Deputy Chief Economist with First American Financial Corporation, said on Twitter that while purchase applications are up 54% since April, the lack of inventory could lead to further house-price appreciation. 

By Andy Beth Miller (via www.themreport.com)

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