According to findings recently released from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey [1] for the week ending August 21, 2020, the number of mortgage applications fell 6.5% from the previous week. This 6.5% dip represents the seasonally adjusted figure, while the unadjusted figure fell 7% compared to the week prior.
Regarding the Refinance Index, that experienced a dip of 10% compared to the week prior, and its current number stands at 34% greater than this same time last year. Statistics for seasonally adjusted Purchase Index rose 0.4 % during the week, while the unadjusted figure revealed a 2% dip. Compared to this same time last year, these figures are 33% higher.
Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting, commented on MBA’s findings: "Mortgage rates were mixed last week, but the rates for 30-year fixed mortgages and 15-year fixed mortgages declined. Despite the lower rates, conventional refinance applications fell 11 percent and government refinance applications fell 6 percent, which pushed the total refinance index to its lowest weekly level since July.”
Kan added: “The home purchase market remains a bright spot for the overall economy. Purchase applications were essentially unchanged but were 33 percent higher than a year ago - the 14th straight week of year-over-year gains. Mortgage rates at record lows and households looking for more space are driving this summer's surge in demand."
Realtor.com’s Senior Economist George Ratiu also offered his insight on the released data: “Mortgage applications dropped 6.5 percent this week, as higher interest rates satiated home owners’ appetite for refinancing, which declined 10 percent. Purchase applications, meanwhile, eked a 0.4 percent gain from a week ago, but remained 33 percent above levels from last year, as buyers aimed to lock in low rates. Under the new normal, where health concerns continue to impact businesses, colleges and schools across the country and the trend of remote work is becoming long-term, home buyers are looking for more space both inside and out.”
Ratiu added further expert insight as to what’s happening in the market, and the reasons why: “People want to balance the uncertainty of the current pandemic with the certainty of a home and a low-rate mortgage. With many K-12 schools and universities choosing to close in-person classes following COVID spikes, Americans recognize that today’s home needs to also function as a classroom or workspace. Sales of both existing and new homes illustrate this new reality, with double-digit jumps in July, and signs of continuing gains in August. The main obstacle on the path to continued gains is the tight supply of homes on the market.”