U.S. mortgage rates fell to a record low for the fourth consecutive week, data from an industry lobby group indicated Wednesday, triggering a surge in refinancing activity as house prices remain elevated despite the coronavirus pandemic.
The Mortgage Bankers Association said 30-year fixed rates for conforming loan balances of less than $510,400 fell 7 basis point to 3.19% for the week ending July 10 a new all-time low that's more than half a percent lower than in March of this year.
The MBA's refinancing index rose 11.9% to 3,3774.3 points, the highest level in at least a month and more than 107% higher than last year, while mortgage applications jumped 5.1%, adjusting for the July 4 holiday. The seasonally-adjusted Purchase Index, which tracks mortgage applications for the purchase of a single family home, fell 6.1% to 305.4 points, but is still up 16% on the year.
“Mortgage rates continued their downward trend, with the 30-year fixed rate falling to another record low in MBA’s survey and 63 basis points lower than the recent high in late March," said Joel Kan, the MBA’s associative vice president of economic and industry forecasting. "The drop in rates led to a jump in refinance activity to the highest level in a month, with refinance loan balances also climbing to a high last seen in March.”
“Purchase applications fell over the week but remained 15% higher than a year ago – the eighth consecutive week of year-over-year increases," he added. "Purchase activity remains relatively strong, despite the continued economic uncertainty and high unemployment caused by the ongoing pandemic.”
U.S. home prices rose 4.7% in April, the S&P CoreLogic Case-Shiller index indicated last week, with prices in its 20-city composite index notching the biggest gains since December 2018.
U.S. homebuilding rebounded in May, according to recent data from the the Commerce Department, but the pace of construction is still some 23.2% lower than last year, and single-family home starts edged only 0.1% higher in May to a pace of 675,000 units.