The end of August usually marks the beginning of the slow season for housing, but as with everything else, this year’s trends are like no other.
Mortgage applications to purchase a home rose 3 percent last week from the previous week and were a stunning 40 percent higher from a year ago, according to the Mortgage Bankers Association’s seasonally adjusted index.
The year-on-year comparison is usually in single digits.
While the figure may have been skewed slightly by the Labor Day holiday, which fell earlier last year, purchase demand is still running significantly higher than a year ago.
Buyers are still getting significant incentive from low mortgage rates. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances up to $510,400 fell to 3.07 percent for loans with a 20 percent down payment.
For the 15-year fixed rate mortgage, the rate declined to a record low of 2.62 percent on conventional loans.
“There continues to be resiliency in the purchase market,” said Joel Kan, an MBA economist. “The average loan size continued to increase, hitting a survey high at $368,600. Highlighting the strong overall demand for buying a home, conventional, VA and FHA purchase applications all increased last week.”
Applications to refinance a home loan rose 3 percent for the week and were 60 percent higher than a year ago. Refinance volume has been extremely high since rates plummeted last March, but the pool of borrowers who haven’t already taken advantage of these low rates is shrinking.
The refinance share of mortgage activity increased to 63.1% of total applications from 62.5% the previous week. The adjustable-rate mortgage share of activity decreased to 2.2% of total applications.