Flight from the Cities: Homebuyer Mortgages Up 28% From Last Year

Flight from the Cities: Homebuyer Mortgages Up 28% From Last Year

Americans are rushing to buy homes outside of cities inflicted by unrest, lockdowns. and rising violence, pushing purchase mortgage applications into the 15th week of annual gains.

Applications for mortgages to purchase homes were up last week 28 percent compared with a year ago, although they fell tw0-tenths of a percentage point from a week earlier, the Mortgage Bankers Association reported Wednesday.

“Purchase applications were essentially unchanged over the week and were 28 percent higher than a year ago – the 15th straight week of year-over-year increases. Lenders are reporting that the strong demand for homebuying is coming from delayed activity from the spring, as well as households seeking more space in less densely populated areas,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, meaning $510,400 or less, fell to 3.08 percent from 3.11 percent. The average rate for larger mortgages was unchanged at 3.41 percent, the MBA said.

Overall mortgage application volume fell 2 percent on a seasonally adjusted basis compared with a week earlier. Compared with a year ago, applications were 35 percent higher than a year ago.

Refinancing has weakened after several months of low rates prompting a lot of homeowners to seek lower rates. It’s likely that refinancing will remain weak unless rates move down again.

“Both conventional and government refinancing activity decreased last week, despite 30-year fixed and 15-year fixed mortgage rates declining to near historical lows. Mortgage rates have remained below 3.5 percent for five months now, and it’s possible that refinance demand may be slowing and will not significantly increase again without another notable drop in rates,” said the MBA’s Kan.

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