Refinance Applications Surge as Rates Fall Again
Apr 15th, 2020 @ 1:25 PM by Amber Nelson
Total U.S. mortgage applications rose last week, as interest rates tumbled to their lowest point on record, according to the Mortgage Bankers Association.
The MBA’s mortgage application volume index rose 7.3% during the week ended April 15, 2020. That was led by a 10% weekly increase in refinance requests. Refinance volume was up 192% over last year, unfazed by the coronavirus quarantining.
That jump was inspired by another drop in conforming 30-year fixed-rate mortgage interest rates. The MBA said they fell to an all-time record low of 3.45%, down from 3.49% last week.
“The decline in rates — despite Treasury yields rising — is a sign that the mortgage-backed securities market is stabilizing and lenders are successfully working through their lending pipelines,” said Joel Kan, an MBA economist.
Home purchase applications did suffer from COVID-19 stay-at-home orders though, falling 2% for the week and 35% from a year ago. Home purchase volume has fallen for five straight weeks now as many buyers have decided to wait out the sequestering. Even the hardiest buyers have had a more challenging time as coronavirus-related viewing rules have been enforced. In the hardest hit COVID-19 states, like New York and California, purchase applications have fallen to half their year-ago volume.
“The purchase market is still expected to rebound, as long as the public health measures to reduce the pandemic’s spread are successful and result in a broader recovery,” Kan said.
Mortgage finance company Freddie Mac is also predicting better days to come for the mortgage world.
“Undoubtedly, the housing market is facing its greatest challenge in over a decade as our nation weathers this unprecedented economic event,” said Sam Khater, Freddie Mac’s chief economist. “Although the uncertainty of the crisis means forecasts of economic activity are more unclear than usual, we expect that most of the economic damage from the virus will be contained to the first half of the year.”
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.