Requests for refinances continue to balloon despite economic uncertainty
Lenders continued to see increased applications for mortgages due to the economic volatility caused by the coronavirus pandemic.
MBA's Market Composite Index experienced a seasonally adjusted 15.3% spike from a week earlier. On an unadjusted basis, the index jumped 15% week over week.
"Mortgage rates and applications continue to experience significant volatility from the economic and financial market uncertainty caused by the coronavirus crisis. 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% jump in refinance applications," said Joel Kan, associate vice president of economic and industry forecasting.
Requests for refinances rose 26% from the week prior and was 168% higher than the same week a year ago. Meanwhile, the seasonally adjusted purchase index fell 11% and 10% on an unadjusted basis.
"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," Kan said. "Purchase applications were down over 10%, and after double-digit annual growth to start 2020, activity has fallen off last year's pace for two straight weeks."
The refinance share of mortgage activity grew to 75.9% of total applications, up from 69.3% last week. The adjustable-rate mortgage share of activity shrank to 3.2% of total applications.
Kan added that home buying and selling activity might slow down soon.
"Buyer and seller traffic – and ultimately home purchases – will also likely be slowed this spring by the restrictions ordered in several states on in-person activities," he said.
