Homebuyer mortgage application spikes to the highest level in more than 11 years, as mortgage rates fell another record low, according to Mortgage Bankers Association.
Mortgage rates fell to another record low last week causing home buyers to rush back into the real estate market. Mortgage rates fell to 3.30%, prompting the biggest rise in mortgage applications to buy a home in more than a decade. According to Mortgage Bankers Association, mortgage applications rose 4% from the previous week, 21% higher than a year ago, the highest volume in more than 11 years.
“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.” Joel Kan, the MBA’s economist said. “Mortgage rates dropped to another record low in MBA’s survey, leading to a 10% surge in refinance applications,” Kan added.
The spike in mortgage applications comes along as people returned to work following months of coronavirus lockdown orders and shuttered businesses. Homebuyers were also fueled by a new record low mortgage rate. The MBA said the average contract interest rate for 30-year fixed rates with conforming loan balances ($510,400 or less) fell 8 basis point to 3.30% for the week ending June 12, a new all-time low, and a full 1% down from the same period last year.
The lower interest rates also spike the refinancing demand. The MBA’s refinancing index rose 10% for the week, 106% higher than a year ago. “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,” Kan said.
The lower interest rates are a response to the Federal Reserve’s moves to encourage consumer spending. The Fed issued emergency rate cuts in March as a preemptive strike against a plunging market in the wake of the coronavirus pandemic.
If you’re thinking about taking advantage of lower interest rates, here are a few things to keep in mind.