The Market Composite Index, a measure of mortgage loan application volume, decreased 8.4 percent on a seasonally-adjusted basis from one week earlier. On an unadjusted basis, the Index decreased eight percent compared with the previous week. The Refinance Index decreased 10 percent from the previous week and was 402 percent higher than the same week one year ago. The seasonally-adjusted Purchase Index decreased one percent from one week earlier. The unadjusted Purchase Index remained unchanged compared with the previous week, and was 11 percent higher than the same week one year ago.
The refinance share of mortgage activity decreased to 74.5 percent of total applications from 76.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.4 percent of total applications.
“The ongoing situation around the Coronavirus led to further stress in the financial markets late last week, with unprecedented volatility and widening spreads. This drove mortgage rates back up to their highest levels since mid-February and led to a 10 percent decrease in refinance applications. However, refinance activity remains very high. Excluding the spike two weeks ago, the Index remained at its highest level since October 2012, and refinancing accounted for almost 75 percent of all applications,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “The Federal Reserve’s rate cut
and other monetary policy measures to help the economy should help to bring down mortgage rates in the coming weeks, spurring more refinancing. Amidst these challenging times, the savings that households can gain from refinancing will help bolster their own financial circumstances and support the broader economy.”
The FHA share of total applications increased to 7.3 percent from 6.9 percent the week prior. The VA share of total applications increased to 14.5 percent from 13.1 percent the week prior. The USDA share of total applications increased to 0.4 percent from 0.3 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 3.74 percent from 3.47 percent, with points increasing to 0.37 from 0.27 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.
“Purchase activity was flat, but remained over 10 percent higher than a year ago,” said Kan. “The purchase market was on firm footing to start the year and has so far held steady through the current uncertainty. Looking ahead, a gloomier outlook may cause some prospective homebuyers to delay their home search
, even with these lower mortgage rates.”