Weekly Mortgage Applications Point to a Remarkable Recovery in Homebuying

Purchase application data is up 6% week to week and now only down 1.5% year over year. That is a 33.5% growth on a year over year basis from the recent Coronavirus lows. 

2020 Before Coronavirus (BC) average growth + 11.6% year over year

Year over year AD (After the Disease) 
-11%
-24%
-33%
-35% (The peak % decline)
-31%
-20%
-19%
-10%
-1.5%

AD average is - 20.5%

If mortgage demand is an indicator, buyers are coming back to the housing market far faster than anticipated, despite coronavirus shutdowns and job losses.

Mortgage applications to purchase a home rose 6% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Purchase volume was just 1.5% lower than a year ago, a rather stunning recovery from just six weeks ago, when purchase volume was down 35% annually.

As states reopen, so are open houses, and buyers have been coming out in force, if masked. Record low mortgage rates, combined with strong pent-up demand from before the pandemic and a new desire to leave urban downtowns due to the pandemic, are driving buyers back to the single-family home market. It remains to be seen if this is simply the pent-up demand or a long-term trend.

Buoying buyers, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of up to $510,400 decreased to 3.41% from 3.43%. Points including the origination fee increased to 0.33 from 0.29 for 80 percent loan-to-value ratio loans.

“The average loan amount for refinances fell to its lowest level since January — potentially a sign that part of the drop was attributable to a retreat in cash-out refinance lending as credit conditions tighten,” said Kan. “We still expect a strong pace of refinancing for the remainder of the year because of low mortgage rates.”

Diana Olick | CNBC
Mortgage Bankers Association.