Mortgage applications for home purchases increase

Applications for mortgages to purchase homes gained for the fourth consecutive week while refinancings dropped, the Mortgage Bankers Association said in a Wednesday report.

A seasonally adjusted index measuring purchase applications rose 11% last week, compared with a 6% increase in the prior week, according to the report. Applications for refinancings fell 3% from the prior week, though the level was 201% higher than a year ago, MBA said.

“There continues to be a stark recovery in purchase applications, as most large states saw increases in activity last week,” said Joel Kan, an MBA associate vice president.

New York led the increases with a 14% jump, after a 9% gain in the prior week. Illinois, Florida, Georgia, California and North Carolina also had double-digit increases last week, said Kan.

“We expect this positive purchase trend to continue – at varying rates across the country – as states gradually loosen social distancing measures, and some of the pent-up demand for housing returns in what is typically the final weeks of the spring homebuying season,” Kan said.

The MBA’s Market Composite Index, a measure of all mortgage loan application volume, increased 0.3% on a seasonally adjusted basis from one week earlier.

The refi share of mortgage applications fell to 67% of all applications from 70% in the prior week. Some of that retreat is due to the loss of 33.5 million jobs since the COVID-19 pandemic hit the U.S. seven weeks ago.

The U.S. unemployment rate in April spiked to a record high of 14.7% in April, more than tripling from March, the Labor Department said on Friday.

The share of applications for mortgages backed by the Federal Housing Administration increased to 11.5% from 11.1% a week earlier, the report said.

The share for home loans backed by the Veterans Administration rose to 13.7% from 13.3%.

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