There’s a scramble to refinance and buy new homes

Mortgage Bankers Association’s index tracking volume of mortgage applications to buy homes rose 2 percent in most recent survey. (iStock)

As the summer heats up, so too is the demand for home loans. 

An index tracking the volume of mortgage applications to buy homes increased 2 percent, seasonally adjusted, from the second week of July when it fell by 6 percent.

The so-called purchase index is a metric based on the Mortgage Bankers Association weekly survey, which encompasses 75 percent of the U.S. residential mortgage market. Joel Kan, who leads industry forecasting for MBA, said the purchase index was up 19 percent year-over-year. 

He said the “strong homebuyer demand” the index shows came “despite mixed results from the various rates.” 

The 30-year fixed mortgage rate increased 1 basis point to 3.20 percent, while jumbo rates dropped 2 basis points to 3.51 percent, according to the MBA’s survey. 

Kan noted, however, that “some creditworthy borrowers are being offered rates even below 3 percent.” Last Thursday, Freddie Mac saidthe average rate for a 30-year fixed-rate mortgage hit 2.98 percent, a new low in its 50 years of tracking.

MBA also tracks weekly refinance applications, which jumped by 5 percent, seasonally adjusted, last week, marking a 122 percent year-over-year increase. 

MBA’s overall index, which measures all home-loan applications, increased by 4.1 percent, and refinancing applications accounted for 65 percent of the total applications. 

written by Erin Hudson | The Real Deal