If mortgage demand is any indicator, buyers are returning to the housing market much faster than expected, despite coronavirus closings and job losses.

Mortgage applications to buy a home were up 6% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Purchase volume was only 1.5% lower than a year ago, a rather astonishing recovery from just six weeks ago, when purchase volume was down by 35 % per year.

“Home purchase requests continue to recover from the large drop in April and have now risen for five straight weeks,” said Joel Kan, MBA economist. “Government purchase requests, which include FHA, VA and USDA loans, are now 5% higher than a year ago, which is an encouraging turnaround from the weakness seen over the past two months. “

As states reopen, so do open houses and buyers have come out in force, if they are masked. Record-breaking mortgage rates, combined with strong pent-up demand from before the pandemic and a new desire to move out of urban downtown areas due to the pandemic, are pulling buyers back to the single-family home market. Whether this is just pent-up demand or a long-term trend remains to be seen.

Stimulating buyers, the average contractual interest rate for 30-year fixed rate mortgages with compliant loan balances of up to $ 510,400 declined from 3.43% to 3.41%. The points, including the origination fee, were reduced from 0.29 to 0.33 for loans with a loan-to-value ratio of 80%.

Low rates, however, are not much of an incentive for current homeowners to refinance. Those demands fell 6% for the week, but were still 160% higher than a year ago, when interest rates were 92 basis points higher. This is the lowest level of refinancing activity in over a month.

“The average loan amount for refinancing fell to its lowest level since January – potentially a sign that part of the decline was attributable to a decline in cash refinancing loans as credit conditions tighten,” Kan said. “We still expect a steady pace of refinancing for the remainder of the year due to low mortgage rates.

Federal regulators this week changed lending guidelines for Fannie Mae and Freddie Mac, allowing refinancing of loans that were or are still part of the government’s mortgage bailout, as part of the coronavirus relief program. These loans can be refinanced once the borrowers have made at least three regular monthly payments. With tough economic conditions and rising unemployment, more borrowers may be looking to save money on their monthly payments.

Lower refinancing demand lowered total mortgage application volume 2.6% for the week.

The refinancing share of mortgage activity fell to 64.3% of total applications, from 67% the previous week. The share of variable rate mortgage activity increased to 3.2% of total applications.