Despite the coronavirus pandemic and rising unemployment, mortgage applications for home purchases increased 6% on an adjusted basis during the week ended May 1, according to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey.
It was the third consecutive week that purchase applications increased on a week-over-week basis.
Applications for refinances fell 2% on an adjusted basis compared with the previous week.
The increase in purchase applications almost perfectly offset the decrease in refinance applications resulting in a total increase of 0.1% for the week.
Although applications for refinances dipped compared with the previous week they were nonetheless 210% higher compared with the same week one year ago.
On an unadjusted basis, total volume increased 1%. Purchase applications increased 7% on an unadjusted basis but were down 19% compared with a year earlier.
“Mortgage application volume was unchanged last week, even as the 30-year fixed rate mortgage declined to 3.40 percent – a new record in MBA’s survey,” says Mike Fratantoni, senior vice president and chief economist for the MBA, in a statement. “Despite lower rates, refinance applications dropped, as many lenders are offering higher rates for refinances than for purchase loans, and others are suspending the availability of cash-out refinance loans because of their inability to sell them to Fannie Mae and Freddie Mac.
“Purchase volume increased for the third week in a row, led by strong growth in Arizona, Texas and California,” Fratantoni adds. “Although purchase activity remains almost 19 percent below year-ago levels, this annualized deficit has decreased as more states reopen amidst the apparent, pent-up demand for home buying.”
The refinance share of mortgage activity decreased to 70.0% of total applications, down from 71.6% the previous week.
The adjustable-rate mortgage (ARM) share of activity increased to 3.0% of total applications.
The average rate for a 30-year fixed-rate mortgage was 3.40%, down from 3.43% the previous week.