This article from HousingWire discusses the increasing demand for mortgages in spite of recent market volatility. The market volatility has been caused by a large influx of mortgage-backed securities (MBS) being sold, as well as the ongoing COVID-19 pandemic. With rising demand and falling MBS prices, mortgage rates have been backing up and are expected to remain at recent lows in the near-term.
Surprisingly, the rising mortgage rates and market volatility did not stop homebuyers from applying for mortgages. According to the Mortgage Bankers Association (MBA), the level of mortgage applications increased, on a seasonally adjusted basis, for the fourth consecutive week. A contributing factor to the increased demand is the low mortgage rates, which are significantly lower than they have been in previous decades. Another factor is that many states have relaxed their foreclosure laws during the pandemic, creating greater opportunities for lenders to lend.
While many lenders saw an increase in demand for mortgages, some lenders saw an increase in refinancing activity. The MBA reported that the refinance index increased 6.4% from the previous week, reaching its highest level in almost three months. The refinance share of mortgage activity increased to 66.5% compared to 65.1% the previous week, reaching its highest market share since May. The increase was led by an increase in FHA and VA refinance applications and coincides with the FHFA’s announcement that it would be increasing the conforming loan limit in 2021.
Overall, the market volatility has not yet affected demand for mortgages, as evidenced by the increasing number of applications seen by lenders. Low mortgage rates and relaxed foreclosure laws have led to an increase in demand for both purchase and refinance mortgages. The refinance share of mortgage applications has been especially high, with the FHFA’s announcement of increasing loan limits in 2021 further driving demand. With mortgages remaining a cost-effective option for many homebuyers, it is likely that mortgage demand will remain strong in the near-term.
You can read this full article at: https://www.housingwire.com/articles/mortgage-demand-rises-amid-mbs-volatility/(subscription required)
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