California’s housing market is showing further signs of promise. Today, the Mortgage Bankers Association (MBA) released the results of its weekly mortgage applications survey for the week ending April 24, 2020. The Golden State experienced a non-seasonally adjusted, week-over-week bump of 17.2 percent in the number of mortgage loan applications to purchase a home.
Nationwide, the volume of mortgage applications from homebuyers rose 12 percent with the 10 most populous states all posting increases in purchase activity, “potentially a sign of the start of an upturn in the pandemic-delayed spring homebuying season,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.
Buyers have been lured back to the market by plummeting interest rates, which dropped to “another record low” in MBA’s survey. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $510,400 or less decreased to 3.43 percent from 3.45 percent. That’s nearly one percentage point lower than where rates stood a year ago.
Refinance activity declined by 7 percent, unsurprising given that refinancing rates are currently less favorable than those for purchase loans. Kan also pointed out that “lenders are still working through pipelines at capacity” while they process small business loans that were offered under the CARES Act. Some lenders have even limited the number of mortgage products they offer and raised borrowing standards amid the economic uncertainty brought on by the pandemic.
While we’re still far from “business as usual” here in California, today’s numbers provide a glimmer of hope for the future of the real estate market.