Mortgage applications to refinance a home loan rose about 20% in the last week to the highest point seen since March, and volume is 93% higher now than it was this time last year, according to data from the Mortgage Bankers Association’s Weekly Applications Survey.
“Booming refinance activity in the first full week of 2021 caused mortgage applications to surge to their highest level since March 2020, despite most mortgage rates in the survey rising last week,” Joel Kan, the associate vice president of economic and industry forecasting at MBA, told CNBC. “The expectation of additional fiscal stimulus from the incoming administration, and the rollout of vaccines improving the outlook, drove Treasury yields and rates higher.”
The network notes that although demand for housing remains high, mortgage applications to purchase a home were 10% higher this time last year. This leaves prospective homeowners with a record low number of available options and quickly-increasing prices. Despite this, Kan did note there are some good signs for initial buyers.
“The lower average loan balance observed was partly due to a 9.2% increase in FHA applications, which is a positive sign of more lower-income and first-time homebuyers returning to the market,” Kan said.
“For now, an air of mortgage rate invincibility and persistent setting of new record lows has been replaced by a healthy respect for what may be the first stage of a rising rate environment, the first time we’ve seen such a thing since 2018,” added Matthew Graham, Mortgage News Daily chief operating officer.
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