Although the Thanksgiving holiday is not usually a popular time for Americans to be purchasing a home, but given then again, most economic numbers amid the pandemic are beyond comparison especially in the bewildered US housing market, it seems that this year was a popular time for such an activity.
According to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending on November 27, which includes an adjustment for the Thanksgiving holiday, mortgage applications rose by 9% from the prior week while purchase applications skyrocketed by 28% compared to the same time a year ago. In the meantime, the Refinance Index dropped by 5% relative to the previous week, but still remained 102% higher than the same week in 2019.
As noted by MBA associate and vice president of economic and industry forecasting Joel Kan, purchasing activity has been significantly strong during a time of the year when demand for housing is typically subdued. Despite dwindling inventory and rising prices, US home sales have been soaring to levels not seen in more than a decade.
Indeed, with the strong rise in demand for housing, prices have also been on a record trajectory. The average purchase loan amount soared to $375,000 during the week ending on November 27, which is the highest on records dating back to 1990. The historically-low mortgage rates are not only serving as an incentive for potential home-buyers, but are also becoming a leverage tool for increased purchasing power and inflating prices. The average contract interest rate for a 30-year fixed-rate mortgage including conforming loan balances of $510,400 or less remained at a record-low of 2.92% last week.
Information for this briefing was found via the MBA. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.