Homebuyer mortgage demand spikes 33% as rates set another record low

Mortgage applications to purchase a home rose 5% for the week and were a remarkable 33% higher than a year ago.

Home prices gains continue to accelerate, so low mortgage rates are giving buyers much-needed help.

After a brief pullback at the end of June, home buyers rushed back into the mortgage market last week, taking advantage of record-low mortgage rates.

Mortgage applications to purchase a home rose 5% for the week and were a remarkable 33% higher than a year ago, according to the Mortgage Bankers Association’s index, which was seasonally adjusted, including for the Fourth of July holiday.

Buyer demand has been incredibly strong since mid-May, after the coronavirus shut down most housing activity in April. The only thing standing in the way of more sales is the record low supply of homes for sale.

Home prices gains continue to accelerate, so low mortgage rates are giving buyers much-needed help. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of up to $510,400 dropped to 3.26% from 3.29%. Points, including the origination fee, for loans with a 20% down payment decreased to 0.35 from 0.36.

The average purchase loan size increased to $365,700 — also another high — as borrowers contend with limited supply and higher home prices.

cnbc: Diana Olick