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Homebuyers seem to have an incredible appetite for new and existing homes, who apply for mortgages at an incredible pace.
According to the Mortgage Bankers Association, mortgage applications to buy homes increased by just 0.4% from the previous week, but a notable 33% more than a year ago.
August is the new April, thanks to the coronovirus epidemic. The demand for pent-ups from the disastrous spring market and a stay-at-home mentality to jointly send more consumers to either buy homes for the first time or upgrade them already.
Low mortgage rates are only adding fuel to the fire. The average contract interest rate dropped from 3.13% to 3.11% for a 30-year fixed-rate mortgage with a loan balance of up to $ 30,400. Points, including basic fees, increased from 0.36 to 0.38 for loans with a 20% down payment.
“The domestic procurement market remains a bright spot for the overall economy,” said MBA economist Joel Kahn. “Mortgage rates at record locations and homes looking for more space are increasing in demand this summer.”
Applications to refinance home loans dropped by 10% for the week, but were up 34% year-over-year. The refinancing market is in a tizzy, as rates took a dramatic step two weeks ago and then fell back only slightly. According to the MBA’s season adjusted report, the refinancing share of mortgage activity decreased to 62.6% of total applications from 64.6% the previous week.
This rate hike was partly due to the recent announcement by Fannie Mae and Freddie Mac that they were raising lender fees specifically on refinancing, starting on 1 September.
According to a FHFA release, “the fee is required to cover the COVID-19 deficit on at least a $ 6 billion contract,” which oversees the two mortgage giants.
Amid heavy pressure from the mortgage industry, however, the FHFA announced a late start date on Tuesday, December 1.
“Extending the effective date will allow lenders to close refinance loans in their pipelines and honor their borrowers’ rate lock commitments, ensuring that economic relief in the form of record low interest rates for consumers. Will continue, ”MBA CEO Bob Broksemat.