The Survey also found that the Refinance Index decreased 19 percent from the previous week
, and was 144 percent higher than the same week one year ago. The seasonally-adjusted Purchase Index decreased 12 percent from one week earlier
. The unadjusted Purchase Index decreased 12 percent compared with the previous week and was 33 percent lower than the same week one year ago.
“Mortgage applications fell last week, as economic weakness and the surge in unemployment continues to weigh heavily on the housing market. Purchase activity declined again, with the Index dropping to its lowest level since 2015 and now down 33 percent compared to a year ago,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “With much less liquidity and tighter credit in the jumbo market, average loan sizes declined, and mortgage rates for jumbo loans increased to a high last seen in January.”
MBA Senior Vice President and Chief Economist Mike Fratantoni noted that the rapid rise in unemployment numbers will undoubtedly impact purchase apps moving forward.
“As bad as this month’s employment numbers were, given the rapid jumps in claims, we fully expect that next month will show even larger job losses,” said Fratantoni. “This weakness will result in a drop in demand for purchase mortgages, but we do expect continued strong demand for refinance loans over the next several months, given the record low level of mortgage rates.”
Refinance activity still led the way in mortgage activity, decreasing to 74.2 percent of total applications from 75.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 3.3 percent of total applications. The FHA share of total applications increased to 10.6 percent from 9.1 percent the week prior. The VA share of total applications increased to 14.3 percent from 12.5 percent the week prior. The USDA share of total applications remained unchanged from 0.4 percent the week prior.
“Given the ongoing rate volatility, along with the persistent lack of liquidity in certain sectors of the MBS market, we expect to see continued weekly swings in refinance activity,” noted Kan.