Buyers seem to have an insatiable appetite for new and existing homes, applying for mortgages at an incredible rate.

Mortgage applications for the purchase of a home rose only 0.4% last week from the previous week, but were remarkably 33% higher than a year ago, according to Mortgage Bankers Association.

August is the new April, thanks to the coronavirus pandemic. The pent-up demand from the disastrous spring market and the new stay-at-home mentality have combined to push more consumers to rush either to buy homes for the first time or to upgrade what they already have.

Low mortgage rates only fuel the fire. The average contractual interest rate for 30-year fixed rate mortgages with compliant loan balances of up to $ 510,400 has declined from 3.13% to 3.11%. Points, including origination fees, decreased from 0.38 to 0.36 for loans with a 20% down payment.

“The home buying market remains a bright spot for the overall economy,” said Joel Kan, MBA economist. “Mortgage rates at record highs and households looking for more space are driving demand soaring this summer.”

Mortgage refinancing requests fell 10% on the week, but increased 34% annually. The refinancing market has been choppy as rates rose dramatically two weeks ago and then declined only slightly. The refinancing share of mortgage business fell to 62.6% of total applications, from 64.6% the week before, according to the seasonally adjusted MBA report.

This rate hike was in part due to a recent announcement by Fannie Mae and Freddie Mac that they would increase lender fees specifically on refinancings, starting September 1.

“The fees are needed to cover expected COVID-19 losses of at least $ 6 billion in businesses,” according to a statement from the FHFA, which oversees the two mortgage giants.

Amid heavy pressure from the mortgage industry, however, the FHFA announced Tuesday evening a postponement of the start date to December 1.

“The extension of the effective date will allow lenders to complete the refinancing of outstanding loans and honor the rate freeze commitments they have made to their borrowers, thereby ensuring economic relief under the form of record interest rates will continue to benefit consumers, ”said MBA CEO Bob Broeksmit.


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