- According to the Mortgage Bankers Association (MBA), mortgage applications as a whole surged +55%
- Demand for refinancing catapulted +79%, the highest jump since April 2009
- Compared to one year ago, refinance applications were up a truly whopping +479%
“Market uncertainty around the coronavirus led to a considerable drop in US Treasury rates (during the week of March 3) causing the 30-year fixed rate to fall,” said Joel Kan, an economist with the Mortgage Bankers Association.
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As you know, as US Treasury rates go, so go mortgage interest rates and homeowners were chomping at the bit to take advantage of those even lower rates.
Demand increased for refinancing in week March 3 2020 to the tune of +79%, the biggest demand for refinancing since April 2009, nearly 11 years ago. Compared with the same week one year ago, refinancing demand has skyrocketed +479%.
Such a demand spike elbowed the MBA to boost its forecasting for 2010 refinance originations upwards to $1.2T. Such a forecast represents an increase of +37% from 2019 and the strongest refinance volume forecasting since 2012.
Kan said, “As lenders handle the rise in applications and manage capacity, mortgage rates will likely stabilize but remain low for now. This in turn will support borrowers looking to refinance or purchase a home this spring.”
As reported by CNBC, the MBA’s seasonally adjusted Purchase Index increased +6% while the unadjusted Index rose +7%, remaining +122% higher than one year ago.
By comparison to refinancing applications, purchase applications rose a modest +6% during week March 3 from the week prior. This increase represented an increase of +12% annually in purchase applications.
Clearly, potential buyers are weighing the pros and cons of low rates and concerns about the overall economy and employment in light of the coronavirus pandemic. All these efforts to find some sort of balance between low rates and economic concerns are, obviously, happening in the midst of record low for-sale inventories around the country.
Overall mortgage specifics during week March 3 looked like this:
- ARM (adjustable rate mortgages) share of activity increased +5.9% of total applications.
- FHA share of mortgage applications decreased to 6.9% from 9.3% the week prior.
- VA share of mortgage applications increased to 13.1% from 10.5% last week.
- Mortgage interest rates for 30-year fixed rate mortgages with conforming loan balances of $510,400 or less stood at 3.47%, the lowest rate since December 2012.
- Average contract rates for 30-year fixed interest rate instruments with jumbo loan balance of $510,400+ stood at 3.58%, the lowest rate since 2011.
- Average contract rates for 15-year fixed instruments were down to 2.9%, a decrease of -.1% from the week prior.
- Average contract rates for 5/1 ARMs stood at 3.02%, down from 3.12% the week prior.
Thanks to both CNBC and HousingWire for source data.
Also read: Podcast: Tim & Julie Harris Sunday Special | Pandemic Is Here, Now What?, Podcast: Coronavirus Declared Pandemic. What Happens Next?, Real Estate Stocks Slammed by Coronavirus Stock Market Fears