As the number of cases of the Coronavirus rises, mortgage applications decreased 29.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 20, 2020. On an unadjusted basis, the Index decreased 29 percent compared with the previous week
To get ahead of the projected impact on the U.S. economic landscape, the Federal Reserve made its first of two March interest rate cuts
, and mortgage rates reached record lows, sparking a flurry of refinance activity
, which jumped as much as 79 percent in a week and 479 percent from a year earlier, prompting the MBA to double its forecast for refinance originations in 2020.
"The U.S. housing market has entered truly uncharted territory, shaken by the COVID-19 pandemic and a corresponding, sharp economic contraction that has already caused millions of Americans to lose their jobs," said Zillow Economist Jeff Tucker. "Rock-bottom mortgage rates have provided some small financial relief for homeowners and buyers, but it hasn't been enough to avoid a slowdown. The big question at the moment is to what degree measures being taken by local, state and national legislators will help limit the number of foreclosures in the months ahead."
This week, the Refinance Index decreased 34 percent from the previous week and was 195 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 69.3 percent of total applications from 74.5 percent the previous week
. The adjustable-rate mortgage (ARM) share of activity decreased to 6.1 percent of total applications.
The seasonally-adjusted Purchase Index decreased 15 percent from one week earlier. The unadjusted Purchase Index decreased 14 percent compared with the previous week
and was 11 percent lower than the same week one year ago.
“The 30-year fixed mortgage rate reached its highest level since mid-January last week, even as Treasury yields remained at relatively low levels. Several factors pushed rates higher, including increased secondary market volatility, lenders grappling with capacity issues and backlogs in their pipelines, and remote work staffing challenges,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “With these higher rates, refinance activity fell 34 percent, and both the conventional and government indices dropped to their lowest level in a month. Looking ahead, this week’s additional actions taken by the Federal Reserve to restore liquidity and stabilize the mortgage-backed securities market could put downward pressure on mortgage rates, allowing more homeowners the opportunity to refinance.”