‘Unrealized Pent-Up Demand’ Causes Mortgage Applications to Jump 8%

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Mortgage application volume increased 8.0% on an adjusted basis during the week ended June 12, according to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey.

Applications for refinances increased 10% while applications for purchases increased 4%.

It was the second consecutive week that total mortgage applications increased – and the ninth consecutive week that applications for purchases increased.

Driving the increase was another drop in mortgage rates, which are now basically the lowest they’ve been in history. The average rate for 30-year fixed-rate mortgage, based on closings, was 3.30% – down from 3.38% the previous week.

That’s the lowest average rate for a 30-year in the survey’s history, the MBA says.

On an unadjusted basis, total application volume increased 7% compared with the previous week.

Applications for purchases increased 2% on an unadjusted basis and were up 21% compared with the same week one year ago.

“The housing market continues to experience the release of unrealized pent-up demand from earlier this spring, as well as a gradual improvement in consumer confidence,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “Mortgage rates dropped to another record low in MBA’s survey, leading to a 10 percent surge in refinance applications. Refinancing continues to support households’ finances, as homeowners who refinance are able to gain savings on their monthly mortgage payments in a still-uncertain period of the economic recovery.”

The refinance share of mortgage activity increased to 63.2% of total applications, up from 61.3% the previous week.

The adjustable-rate mortgage (ARM) share of activity decreased to 2.8% of total applications.

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