U.S. Mortgage rates fell to a fresh record low last week, while new applications edged higher and purchase volumes continued to increase as more states around the country plot coronavirus lockdown exits.
The Mortgage Bankers Association said 30-year fixed rates for conforming loan balances of less than $510,400 fell 3 basis points to 3.4% for the week ending May 1, the lowest on record and a full 1% lower from the same period last year. The MBA's refinancing index fell 1.7% to 3,835.7 points but applications rose by a modest 0.1% after the late April decline of 3.3%.
"Mortgage application volume was unchanged last week, even as the 30-year fixed rate mortgage declined to 3.40 percent – a new record in MBA’s survey,” said the MBA's chief economist Mike Fratantoni. “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.”
"Purchase volume increased for the third week in a row, led by strong growth in Arizona, Texas and California," Fratantoni added. "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.”
New home sales fell the most in more than 6 years in March, the Commerce Department said on April 23, to a seasonally adjusted annual rate of 627,000 units, while the National Association of Realtors pending home sales index fell 16.3% from the same period last year.