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New money activity edged up last week for the first time in a few weeks, but a decline in refinancing pushed the overall metrics down, according to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association (MBA).
"The news in this week's release is that purchase applications, still recovering from a five-year low, increased 12% last week to the strongest level in almost a month," said Joel Kan, MBA associate vice president of economic and industry forecasting, in the trade group's announcement on Wednesday, April 29.
Kan said the 10 largest states all showed purchase application increases from the week before. He called that "potentially a sign of the start of an upturn in the pandemic-delayed spring homebuying season, as coronavirus lockdown restrictions slowly ease in various markets."
Other signs pointing to a nascent recovery, at least in homebuying in an economy devastated by the COVID-19 pandemic, include jumps in "Windows" shopping on Zillow (NASDAQ: Z) (NASDAQ: ZG) and last week's pending home sales report from the National Association of Realtors (NAR).
On the other hand, joblessness that continues to soar as multiple states make baby steps toward reopening their economy continues to underpin a relentless, unprecedented rise in mortgage forbearance rates.
Pockets of promise in hard-hit states
Kan singled out hard-hit Washington state, California, and New York for increases in new mortgage applications, the latter "seeing a significant gain after declines in five of the last six weeks."
This table shows the week-over-week and year-over-year percent change in the number of purchase applications from those three states:
|State||Week-Over-Week % Change: Week Ending 4/24/20||Week-Over-Week % Change: Week Ending 4/17/20||Year-Over-Year % Change: Week Ending 4/24/20||Year-Over-Year % Change: Week Ending 4/17/20|
Overall, the MBA said, its Market Composite Index fell 3.3% from the week before, depressed by a 7% decline in refinancing volume, which offset the 12% jump in new money applications.
The refinance share of mortgage activity decreased to 71.6% percent of total applications from 75.4% the previous week, the trade group said.
Lower rates drive higher interest for buyers
"Contributing to the uptick in purchase applications was that mortgage rates fell to another record low in MBA's survey, with the 30-year fixed rate decreasing to 3.43%," Kan said.
The average contract rate for 30-year, fixed-rate jumbo loans (more than $510,400) was at 3.72% last week, while 15-year fixed-rate mortgages were at 2.98% on average. Those are both based on 80% loan-to-value notes.
"Lenders are still working through pipelines at capacity," the MBA economist said.
What a difference a year makes
Even with the decrease in the past week, refinance activity was 218% higher than the same week last year on a seasonally unadjusted basis, according to the MBA's Refinance Index.
The equivalent Purchase Index that jumped 12% in a week is still 20% lower than the same week in April 2019.
The mortgage application survey has been conducted weekly since 1990, the MBA said, and uses March 16, 1990, as the base period and value for its indexes.
Respondents include mortgage bankers, commercial banks, and thrifts and cover more than 75% percent of all U.S. retail residential mortgage applications, the trade group said.
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