Key Highlights
- Refinance applications spiked +28% for the week
- Purchase applications dropped -11% for the week
- As a whole, total mortgage applications increased +15.3% for the week
Like most everything else in this AC or After Coronavirus world, the mortgage market is seems to be splitting in two opposite directions. As they have been, refinance applications stayed in the mortgage market driver’s seat by jumping +26% for the week and +168% compared to one year ago. Borrowers want to save money any way they can…they just have to make sure to read the fine print when signing up for lower monthly payments to make sure the entire deal gives them lower payments.
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Meanwhile, purchase applications dropped -11% for the week and were -24% lower than last year. The more dispiriting joblessness rates and economic data, the fewer mortgage purchase applications.
Total mortgage application volume was +15.3% higher than the week before and +67% higher than one year ago, according to the Mortgage Bankers Association (MBA). The refinance portion of the entire mortgage market increased to 75.9%, up from 69.3% the week before.
Mortgage rates fell to 3.47% from 3.82% the week before with points decreasing to 0.33 from 0.35 for loans with a 20% down payment for a 30- fixed-rate mortgage with a conforming loan balance of $510,400 or less with a 20% down payment.
According to Joel Kan, MBA’s associate vice president of economic and industry forecasting, “Mortgage rates and applications continue to experience significant volatility from the economic and financial market uncertainty caused by the coronavirus crisis. The bleaker the economic outlook, along with the first wave or realized job losses reported in last week’s unemployment claims numbers, likely caused potential homebuyers to pull back.”
Hardest hit so far in terms of home purchases and mortgage purchase applications are the states of New York, California and Washington, the same states hardest hit by COVID-19.
Kan added, “Buyer and seller traffic – and ultimately home purchases – will also likely be slowed this spring by the restrictions ordered in several state on in-person activities.”
Thanks to CNBC’s Diana Olick.
Also read: Reactions to Federal Reserve’s Moves, Podcast: Global Economic Crash, What Next? | Tim and Julie Harris Sunday Special, Could Widening Crack in Mortgage Market Sink US Home Prices?
