US mortgage rate hits record low, purchase application at 11-year-peak

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US mortgage rate hits record low, purchase application at 11-year-peak

A near-zero benchmark interest rate coupled with Fed Chair Powell’s pledge last week to keep interest rate steady at least until end-2021, led to a sharp nosedive in mortgage rate last week, eventually uplifting the number of applications filed for both home purchases alongside mortgage refinancing, the Washington-based Mortgage Bankers Association’s weekly survey report had revealed on Wednesday.

Aside from that, according to the Mortgage Bankers Association’s survey report that was released earlier on the day, the 30-year fixed-rate mortgage, the popular-most US home loan, fell to 3.30 per cent in the week that ended on June 12 compared to a reading of 3.38 per cent a week earlier.

In point of fact, US Mortgage rates fell by nearly half a percentage point compared to the same time a year earlier after the US Federal Reserve had slashed its benchmark interest rate to near-zero in order to insulate the US economy from the pandemic-driven slump.

Applications for mortgage to buy homes jumped to an 11-year high

Aside from that, while the overall mortgage application had witnessed an uptick of 8 per cent last week followed by a drop in borrowing costs, mortgage refinancing application had increased by 10 per cent since the all-time-peak registered on late-April and the new applications for mortgage loans to purchase a home had been shot up to an 11-year high.

Meanwhile, referring to a gradual improvement in consumer confidence alongside an unprecedented demand in mortgage loans earlier this spring, the Mortgage Bankers Association’s Vice President of Economic and Industry Forecasting, Joel Kan said in a statement followed by the release of US Mortgage data for the week that ended on June 12, “The housing market continues to experience the release of unrealized pent-up demand from earlier this spring, as well as a gradual improvement in consumer confidence.