The Market Composite Index (a measure of mortgage loan application volume) increased by 15.3 percent on a seasonally adjusted basis, and the Refinance Index increased 26 percent on an unadjusted basis during the week ending March 27 compared to the previous week, according to the Mortgage Bankers Association (MBA).
The increase in volume followed a sizable 35-basis-point drop in conforming loan interest rates, which seems to have enticed homeowners into action.
“Mortgage rates and applications continue to experience significant volatility from the economic and financial market uncertainty caused by the coronavirus crisis,” Joel Kan, vice president of Economic and Industry Forecasting at the MBA, said in a statement.
“After two weeks of sizeable increases, mortgage rates dropped back to the lowest level in MBA’s survey, which in turn led to a 25 percent jump in refinance applications,” Kan added. “The bleaker economic outlook, along with the first wave of realized job losses reported in last week’s unemployment claims numbers, likely caused potential homebuyers to pull back. Purchase applications were down over 10 percent, and after double-digit annual growth to start 2020, activity has fallen off last year’s pace for two straight weeks.”
The weekly 26 percent increase in the Refinance Index showed a 168 percent index increase year-over-year.
However, the seasonally adjusted Purchase Index decreased 11 percent from the previous week, and the unadjusted Purchase Index likewise decreased by 10 percent.
Out of all applications, refinance applications made up 75.9 percent, compared to 69.3 percent of applications the previous week. The adjustable-rate mortgage share, however, made up only 3.2 percent of applications.
Among Washington, California and New York, the latter state saw the greatest week-over-week change in non-seasonally adjusted purchase applications, while California witnessed the greatest year-over-year change.
Across mortgage servicers, the Federal Housing Administration (FHA) saw the greatest increase in total applications, holding 9.1 percent share of applications up from 8.4 percent of application the previous week. The Veterans Administration’s share of applications remained the same at 12.5 percent, and the U.S. Department of Agriculture’s share also remained unchanged at 0.4 percent.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances (balances of $510,400 or less) decreased from 3.82 percent the week before to 3.47 percent. For 30-year fixed-rate mortgages with jumbo loan balances (those greater than $510,400), however, the average contract rate remained unchanged at 3.84 percent.
For 30-year fixed-rate mortgages backed by the FHA, the average contract interest rate decreased to 3.57 percent from 3.69 percent. On the 15-year fixed-rate mortgage side, the average decreased to 3.05 percent from 3.28 percent. Likewise, the average contract interest rate for 5/1 ARMs decreased slightly to 3.35 percent from 3.38 percent.