Mortgage rates have continued to drop to record or near-record lows, leading to increases in mortgage applications.
The Mortgage Bankers Association (MBA) reported that applications increased slightly from a week earlier, with both purchase and refinance originations posting gains.
Purchase applications gained from a week earlier, up 7 percent, although that level was 19 percent below a year ago. Refinances, meanwhile, rose 210 percent from a year earlier, although they dropped 2 percent from a week earlier.
MBA reported rates on 30-year fixed rate mortgages fell to 3.40, a record low for the association’s survey.
“Despite lower rates, refinance applications dropped, as many lenders are offering higher rates for refinances than for purchase loans, and others are suspending the availability of cash-out refinance loans because of their inability to sell them to Fannie Mae and Freddie Mac,” Mike Fratantoni, MBA senior vice president and chief economist said in a press release. “Purchase volume increased for the third week in a row, led by strong growth in Arizona, Texas and California. Although purchase activity remains almost 19 percent below year-ago levels, this annualized deficit has decreased as more states reopen amidst the apparent, pent-up demand for homebuying.”
A later report from Inside Mortgage Finance found that Fannie and Freddie were not refusing all cash-out refis, but only those which are in forbearance.
Rates fell as low as 3.19 on 30-year fixed rate mortgages on May 1, according to Mortgage News Daily. That’s just above the record-low level of 3.13 percent registered March 2.
And Freddie Mac reported that after it found record-low rates of 3.23 percent in the week ending April 30, rates ticked up to 3.26 percent in the most recent week.
“Mortgage rates stayed at or near record lows for the fifth straight week and homeowners are taking advantage with refinance activity remaining high,” Freddie Mac Chief Economist Sam Khater said in a release. “Although purchase demand declined 35 percent year-over-year in mid-April, demand has improved modestly over the last three weeks.”
MBA reported that the refi share of applications declined slightly to 70 percent from 71.6 percent a week earlier as purchases picked up.
All the data was supported by the announcement from Gateway Mortgage Group, a division of Gateway First Bank, which said that it funded more than $1 billion in residential mortgage loans in April, despite the pandemic’s effects. That’s the best monthly performance in the company’s 21-year history.
“We are excited to have been able to help over 5,170 families with their mortgage financing needs along with providing opportunities for our 1,300 employees. As we celebrate a financial milestone in our company’s history, we will continue to recognize the impact our work has on the families we touch,” says Mark Revard, divisional executive vice president, in a press release.
Gateway said it originated more than $3.2 billion in mortgage loans year to date through April, putting the company on track to potentially surpass its record-breaking year of $7.7 billion funded loans in 2019.
“We recognize the COVID-19 situation has put extra stresses on the families we serve, and our team has shown remarkable commitment and an amazing resilience while helping so many,” Gateway First CEO Scott Gesell. “This speaks directly to the testament that Gateway is committed to strengthening families while becoming an industry leader.”