The Mortgage Bankers Association reported Wednesday that demand for home loans surged last week as the average rates for 15 and 30 year mortgages reached new record lows. The group's seasonally adjusted index of mortgage applications activity, which measures demand for home purchase loans as well as refinancing, rose 1.7 percent in the week ended May 4th as demand for purchase loans increased for the third week in a row.
With labor market concerns easing in recent months, and rental prices outpacing the cost of homeownership in may areas, Americans have started returning to the homebuying market, encouraged by ultra-low interest rates to make what will for many be the biggest investment in their lives. As a result, the MBA's measure of demand for home purchase loans surged 3.4 percent. Refinancing demand rose last week as well, gaining 1.3 percent, but interest rates have been around record lows for so long now that the majority of homeowners locked into mortgages with high rates have already refinanced, at least those who are able to qualify.
Underscoring the decline of potential candidates for refinancing loans in the US, the refinancing share of all mortgage applications fell to 72.1 percent last week from 72.6 percent the week before, the lowest percentage accounted for by refis in a month.