Mortgage Applications Jump in MBA Weekly Survey
The unofficial start of the spring home buying season began with a bang, as mortgage applications jumped more than 15 percent from the previous week and key interest rates hit a seven-year low, the Mortgage Bankers Association reported this morning in its Weekly Applications Survey for the week ending Feb. 28.
The results for the week ending February 21 included an adjustment for the Presidents’ Day holiday.
The Market Composite Index increased by 15.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 29 percent compared to the previous week.
The unadjusted Refinance Index increased by 26 percent from the previous week and was 224 percent higher than the same week one year ago. The refinance share of mortgage activity increased to 66.2 percent of total applications from 60.8 percent the previous week.
The seasonally adjusted Purchase Index decreased by 3 percent from one week earlier. The unadjusted Purchase Index increased by 11 percent compared to the previous week and was 10 percent higher than the same week one year ago.
The FHA share of total applications decreased to 9.3 percent from 10.5 percent the week prior. The VA share of total applications decreased to 10.5 percent from 11.8 percent the week prior. The USDA share of total applications decreased to 0.4 percent from 0.5 percent the week prior.
“The 30-year fixed rate mortgage dropped to its lowest level in more than seven years last week, amidst increasing concerns regarding the economic impact from the spread of the coronavirus, as well as the tremendous financial market volatility,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist. “Refinance demand jumped as a result, with conventional refinance applications increasing more than 30 percent. Given the further drop in Treasury rates this week, we expect refinance activity will increase even more until fears subside and rates stabilize.”
“We are now at the start of the spring homebuying season,” Fratantoni added. “While purchase applications were down a bit for the week, they are still up about 10 percent from a year ago. The next few weeks are key in whether these low mortgage rates bring in more buyers, or if economic uncertainty causes some home shoppers to temporarily delay their search.”
MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.57 percent from 3.73 percent, with points decreasing to 0.26 from 0.27 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) decreased to 3.63 percent from 3.72 percent, with points decreasing to 0.21 from 0.23 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by FHA decreased to 3.74 percent from 3.84 percent, with points decreasing to 0.25 from 0.26 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.03 percent from 3.18 percent, with points increasing to 0.24 from 0.23 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 5/1 adjustable-rate mortgages decreased to 3.12 percent from 3.21 percent, with points decreasing to 0.14 from 0.28 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The ARM share of activity increased to 6.4 percent of total applications.
The survey covers more than 75 percent of all U.S. retail and consumer direct residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.
