Mortgage demand from homebuyers spikes 28%, and the average loan amount sets a record high
- Mortgage applications to purchase a home jumped 9% last week from the previous week and were 28% higher annually, according to the Mortgage Bankers Association.
- Applications to refinance a home loan fell 5% for the week, but were an impressive 102% higher than a year ago.
Thanksgiving week isn't usually a popular time for homebuying, but most economic numbers this year are incomparable, especially in the pandemic-spiked housing market.
Mortgage applications to purchase a home jumped 9% last week from the previous week, according to the Mortgage Bankers Association's seasonally and holiday adjusted index. Purchase applications were a stunning 28% higher from a year ago.
"Purchase activity continued to show impressive year-over-year gains, with both the conventional and government segments of the market posting another week of growth," said Joel Kan, MBA's associate vice president of economic and industry forecasting. "Housing demand remains strong, and despite extremely tight inventory and rising prices, home sales are running at their strongest pace in over a decade."
Fast-rising prices caused the average purchase loan amount to hit $375,000 last week, the largest since the inception of MBA's survey in 1990. Low mortgage rates are not only giving buyers emotional incentive, they're also giving them more purchasing power, and helping to inflate prices.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) was unchanged at 2.92% last week, a record low, with points decreasing to 0.31 from 0.35 (including the origination fee) for loans with a 20% down payment. That rate was 105 basis points higher a year ago.
Applications to refinance a home loan fell 5% for the week, but were an impressive 102% higher than a year ago.
"The ongoing refinance wave has been beneficial to homeowners looking to lower their monthly payments during these challenging economic times brought forth by the pandemic," said Kan, adding that the mortgage industry is poised for its strongest year in originations since 2003.