Refinance Demand Jumps 79% on Rate Dive
Mar 11th, 2020 @ 11:48 AM by Amber Nelson
Refinance applications volume jumped an astounding 79% from last week and are up 479% compared with a year ago. Refinances made up 76.5% of all applications, up from 66.2% the week before.
The surge in refinance requests came after the Federal Reserve dropped its target rate last week in response to market fears about the coronavirus. The average rate on a 30-year fixed-rate mortgage then fell to 3.29%, according to Freddie Mac. That was a 16-basis point plunge from the week before and the lowest rate ever recorded in the almost-50 years that Freddie Mac has tracked rates. One year earlier, the average rate was more than a full percentage point higher at 4.41%.
“Taking into the account the current economic situation and how much rates have fallen, MBA is nearly doubling its 2020 refinance originations forecast to $1.2 trillion, a 37% increase from 2019 and the strongest refinance volume since 2012,” said Joel Kan, an MBA economist. “As lenders handle the wave 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.”
Home purchase loan applications rose a respectable 6% during the week and 12% annually, making for a weekly 55.4% increase in total mortgage request volume. On a yearly basis, mortgage demand is up 192%.
Mortgage rates may start to stabilize and rise again soon, as the federal government has explored a stimulus package to bolster the economy in the wake of coronavirus turmoil.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.