The Market Composite Index, a measure of mortgage loan application volume, increased 15.1 percent on a seasonally-adjusted basis from one week earlier
. On an unadjusted basis, the Index increased 29 percent compared with the previous week
. The Refinance Index increased 26 percent from the previous week
, and was 224 percent higher than the same week one year ago. The seasonally-adjusted Purchase Index decreased three percent from one week earlier. The unadjusted Purchase Index increased 11 percent, compared with the previous week and was 10 percent higher than the same week one year ago.
“The 30-year fixed rate mortgage dropped to its lowest level in more than seven years last week, amidst increasing concerns regarding the economic impact from the spread of the coronavirus, as well as the tremendous financial market volatility. Refinance demand jumped as a result, with conventional refinance applications increasing more than 30 percent," said Mike Fratantoni, MBA’s senior vice president and chief economist. “Given the further drop in Treasury rates this week, we expect refinance activity will increase even more until fears subside and rates stabilize.”
The refinance share of mortgage activity increased to 66.2 percent of total applications from 60.8 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.4 percent of total applications. The FHA share of total applications decreased to 9.3 percent from 10.5 percent the week prior. The VA share of total applications decreased to 10.5 percent from 11.8 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.74 percent from 3.84 percent, with points decreasing to 0.25 from 0.26 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
“We are now at the start of the spring homebuying season,” said Fratantoni. “While purchase applications were down a bit for the week, they are still up about 10 percent from a year ago. The next few weeks are key in whether these low mortgage rates bring in more buyers, or if economic uncertainty causes some home shoppers to temporarily delay their search.”