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As the Mortgage Bankers Association’s 30-year fixed-rate mortgage rate reached a new historic low of 3.3%, sliding down by 8 basis points from the previous week, its benchmark Market Composite Index increased by 8% from the previous week, on a seasonally adjusted basis. Purchase applications increased to the highest level in over 11 years and for the ninth consecutive week. Refinancing activity also posted gains, not only on a weekly basis, but also on a year-over-year basis.

The refinancing and purchasing gains come amid the sharp competition which the pandemic has given rise to for prospective homebuyers. The underlying reasons for this are low home inventory, thus enabling bidding wars among nearly half of homeowners who made a purchase between January and May, according to a recent study. With the Federal Reserve’s recent announcement of an accommodative monetary stance in order to aid recovery efforts, a low-interest rate environment is bound to continue for the short-term, effectively benefiting housing demand.