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The Mortgage Bankers Association's latest Weekly Mortgage Applications Survey reported an 8.7% decrease in applications on an adjusted basis and a 9% decrease on an unadjusted basis, for the week ending June 19, 2020.
The refinance index dipped by 12% from the previous week, though, it was still 76% higher than the same week in 2019. The seasonally adjusted purchase index dipped 3% and the unadjusted purchase index fell 4%.
“Mortgage applications decreased 9% last week, with both refinance and purchase activity falling, despite the 30-year fixed-rate mortgage staying at 3.3%–the record low in MBA’s survey,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Refinance applications dropped to their lowest level in three weeks, but the index remained 76% higher than a year ago. Despite the decline last week, MBA still anticipates refinance originations to increase to $1.35 trillion in 2020–the highest level since 2012.”
Kan stated that the purchase market has been holding strong despite high unemployment and economic uncertainty. That being said, he sees a potential for that growth to hit some bumps in the road in the coming months, due to the combination of pent-up demand from earlier in the spring and a low supply of new and existing homes on the market. He believes that additional housing inventory is needed in order for buyers to have more options available to them and keep home prices from skyrocketing.
According to the report, the refinance share of mortgage activity decreased from 63.2% to 61.3% and the adjustable-rate mortgage (ARM) share of activity increased to 3.1% of total applications. The Federal Housing Administration share increased from 11% to 11.4%, the VA share dipped from 11.5% to 11% and the USDA share remained stagnant at 0.7%.
Earlier this week, the National Association of Realtors (NAR) reported a 9.7% drop in existing-home sales in May 2020, and a year-over-year decline of 26.6%. Meanwhile, the MBA's latest Forbearance and Call Volume Survey found the total number of loans in forbearance decreased for the first time since the survey began in March, from 8.55% of servicers’ portfolio volume in the prior week, to 8.48%.
