Corona Virus Fears Fuels Mini-Refinance Boom
Feb 12th, 2020 @ 11:31 AM by Amber Nelson
Global fears about the Corona Virus have pushed mortgage interest rates lower, which in turn has inspired many homeowners to refinance, according to the Mortgage Bankers Association.
Refinance applications rose 5% for the week ended February 7, 2020, and they increased an astonishing 207% compared with a year ago. During the same time, the average rate on a 30-year fixed rate mortgage fell to a three-year low of 3.45% with 0.7 point, according to Freddie Mac, down from 3.51% the week before.
Refinance requests made up 65.5% of all mortgage activity, up from 65.5% the previous week.
“The mortgage market continues to be active in early 2020, as applications increased for the third straight week,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “…The refinance index climbed to its highest level since June 2013, and refinance loan sizes also increased as a result of an active jumbo lending market.”
Total mortgage application volume only increased 1.1% for the week, however, as home purchase requests fell 6%. They were still 16% higher than this time last year but interest rates were almost a full point higher than as well. Rising prices and limited inventory is keeping buyers from closing deals.
Kan said, “Last month was the strongest January for purchase applications since 2009, which is perhaps a sign that mild weather brought out prospective buyers earlier than normal. Despite a decline last week, purchase activity was still up almost 16 percent from a year ago.”
Economists are seeing signs that the financial markets are stabilizing, especially in China where the Corona Virus first sparked fears and interest rates may be leveling out in the near future.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.