U.S. mortgage rates fell to a fresh record low last week, according to data published Wednesday, while purchase applications surged as coronavirus lockdown restrictions in key markets eased as the pandemic nears its peak.
The Mortgage Bankers Association said 30-year fixed rates for conforming loan balances of less than $510,400 fell 2 basis points to 3.43% for the week ending April 24, the lowest on record and a full 1% lower from the same period last year. The MBA's refinancing index fell 7.3% to 3,901.4 points.
New applications rose 11.6% from the prior week, the MBA said, the highest in a month as rates to buy a new home fell below those charged to refinance an existing mortgage. The purchase index, however, remains 20% lower than last year as more than 26.5 million Americans filed for unemployment benefits over the past five weeks and data continuesto the highlight the extent of the coronavirus damage to the U.S. economy.
“The ten largest states had increases in purchase activity, which is potentially a sign of the start of an upturn in the pandemic-delayed spring homebuying season, as coronavirus lockdown restrictions slowly ease in various markets,” said Joel Kan, the MBA’s associate vice president of economic and industry forecasting. “California and Washington continued to show increases in purchase activity, with New York seeing a significant gain after declines in five of the last six weeks.”
"Lenders are still working through pipelines at capacity, and observed changes in credit availability for refinance loans have also, in turn, impacted rates," Kan added.
Last month, U.S. existing home sales fell the most in nearly five years, according to data from the National Association of Realtors.
The 8.5% plunge from the previous month, to a seasonally-adjusted annual rate of 5.27 million, is likely to be followed by a sharper pullback in April, as well, as stay-at-home orders keep around 90% of the U.S. economy on lockdown amid the coronavirus pandemic.