Mortgage applications to buy a home surge to the highest in 11 years as rates hit a survey low
- Mortgage applications to buy a home spiked 4% last week to an 11-year high, the Mortgage Bankers Association said on Wednesday.
- The jump in demand was likely fueled by falling mortgage rates — the fixed 30-year rate fell to 3.3%, the lowest in the MBA survey's history.
- That led to a 10% spike in refinance applications as existing homeowners sought lower rates.
- Read more on Business Insider.
Homebuyers are flocking back to the housing market as the US economy opens up from the coronavirus pandemic, fueled by record-low mortgage rates and pent-up demand.
Mortgage applications to purchase a home spiked 4% last week and were 21% higher than in the same period one year ago, the Mortgage Bankers Association said on Wednesday. The ninth straight week of gains in the purchase index pushed it to its highest level in 11 years, the report said.
"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 associate vice president of economic and industry forecasting, said in a statement.
Falling mortgage rates added fuel to the homebuying fire — the average contract interest rate for the common 30-year fixed-rate mortgage fell to 3.3% from 3.8% in the week, representing a record low for the survey. Other measures of the 30-year rate have also recently dipped to record lows.
The record-low rates sparked a significant jump in refinancing activity, which had been falling in recent weeks. Last week, refinancing applications spiked 10% and are now a staggering 106% higher on the year, the MBA said.
"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.