The number of applications for mortgages increased by 5% in a single week with the latest reports. At the same time, mortgage demand displayed by homebuyers increased 13% on an annual basis. As mortgage rates are dropping and inventory in the housing market is running low, mortgage demand is increasing as a consequence. With the beginning of June, mortgage demand spiked while May reports for unemployment were slightly improved when compared to April 2020.
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Mortgage Rates Slightly Increasing with June 2020
Mortgage rates showed slight increases with the beginning of June, recording rises 3.37% to 3.38%. The increase was noted in 30-year mortgages with fixed rates and 20% down payments. The market is showing signs of recovery as the purchasing power is rising. According to the Mortgage Bankers Association, purchase activity is rising for eight straight weeks while employment rates are also showing improvements.
Quick Recovery in the Housing Market
Spring sales in the housing market might have been lower than it was initially expected in 2019 before the outbreak, the market is quickly recovering with the end of spring. According to Zillow, home inventory is declining with 25% fewer homes for sale since the last week of May and with the beginning of week one in June. Purchase activity is rising, which is a favorable sign despite the rising home prices.
Mortgage Refinancing Applications Dropping
Lenders are offering refinancing under new and stricter requirements, leaving many potential borrowers unable to benefit from low mortgage rates. To reduce the risk, lenders are offering less favorable conditions for refinancing, which is how declines were noted in the last two weeks in terms of the number of applications for mortgage refinancing. Although mortgage rates have dropped once again, it remains uncertain whether the rates will continue to decline in summer or surge.
