Weekly Mortgage Demand Hits A Wall, Despite Low Interest Rates

Weekly Mortgage Demand Hits A Wall, Despite Low Interest Rates

April 22, 2020
Homes in San Francisco.
Weekly mortgage demand is down as borrowers continue to act cautiously on large purchases during the COVID-19 crisis. The Mortgage Banker Association's Weekly Survey reported a 0.3% decrease in total mortgage application volume last week. Overall volume remains 70% higher than 2019, but those numbers are being driven by the refinance boom that has happened over the past month. 
“The pandemic-related economic stoppage has caused some buyers and sellers to delay their decisions until there are signs of a turnaround. This has resulted in reduced buyer traffic, less inventory, and March existing-homes sales falling to their slowest annual pace in nearly a year,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Despite the 30-year fixed rate remaining at a record low in MBA’s survey, the refinance index dropped slightly last week but remained close to its 2013 highs. Borrowers continue to take advantage of low rates to gain some monthly savings, which is a welcome reprieve during these tough economic times.” 
There is good news for states like California and Washington which are both seeing a rise in activity, given they were some of the hardest hit by the COVID-19 pandemic. 
According to the survey, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) remained stayed stagnant at 3.45 percent, with points remaining unchanged at 0.29 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.