It's a hot home buying summer despite COVID-19-fueled market setbacks in the spring.
The stalled spring market spurred from the uncertainty of the coronavirus pandemic has led to increased demand in August with more Americans working remotely. And with back-to-school being held virtually in many parts of the country, the need for more space for work-life balance coupled with low mortgage rates is driving consumers to buy now.
Indeed, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $510,400 or less went down to 3.11% from 3.13%, with points increasing to 0.38 from 0.36 including the origination fee with a 20% down payment, the Mortgage Bankers Association data shows.
“The housing sector continues to recover a lot stronger than we had all expected. We had a big downturn in March and April with a lot of uncertainty given the job market, but we’ve now seen over three months of year-over-year gains,” Joel Kan, MBA’s associate vice president of Economic and Industry Forecasting, told FOX Business Wednesday.
Kan says people looking to buy homes in the spring waited until circumstances surrounding COVID-19 eased up a bit.
“Initially the thinking was, ‘OK, we didn’t have a spring buying season because of the pandemic and that was all pushed into late summer, but we might be at a point where potentially this is more than what was just pent-up demand," Kan said.
Kan says people considered buying in less populated areas with social distancing in mind. And separately, real estate firm Redfin in May it has seen "an exceptionally higher rate” of interest in homes located in small towns with populations under 50,000 compared to a year ago.
Refinance loans, meanwhile, were down 10% from the previous week as it becomes more costly. Government-regulated financiers Fannie Mae and Freddie Mac will now charge a new 0.5% fee on refinanced loans beginning Sept. 1. The fee, they said, was to offset the costs of delinquent loan repayments as a result of record-high unemployment rates during the pandemic.