Mortgage applications for home purchases surged 9 percent in the final week of November, according to an analysis from the Mortgage Bankers Association (MBA).
The MBA’s seasonally and holiday adjusted index indicated that not only did applications increase 9 percent from the previous week, they were up 28 percent from 2019.
“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,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, told CNBC. “Housing demand remains strong, and despite extremely tight inventory and rising prices, home sales are running at their strongest pace in over a decade.”
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The average purchase loan amount last week was $375,000, a record-high since the MBA began measuring in 1990. Contract interest rates for 30-year fixed-rate mortgages remained static at 2.92 percent, tying the record low. Refinancing applications fell 5 percent but remained more than twice those of the same week in 2019.
“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,” Kan told CNBC.
In mid-November, Michelle Bowman, a member of the Federal Reserve’s board of governors, said the mortgage industry remains vulnerable to the fallout of the financial crisis caused by the coronavirus pandemic.
“We certainly can’t count on all of these factors being present in future periods of economic stress,” Bowman said at a Federal Reserve Bank of Cleveland conference.
“In different circumstances, the large-scale delinquencies and defaults we saw last spring could have caused some mortgage companies to fail, especially if the surge in origination and refinancing income had not materialized,” she added. “Our financial system and our mortgage market will be more resilient when they welcome and appropriately manage the risks associated with both bank and nonbank mortgage firms.”