by Calculated Risk on 2/05/2020 07:00:00 AM
Wednesday, February 05, 2020
Mortgage applications increased 5.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 31, 2020. The previous week’s results included an adjustment for the Martin Luther King Jr. holiday.Click on graph for larger image.
... The Refinance Index increased 15 percent from the previous week – its highest level since June 2013 – and was 183 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 10 percent from one week earlier. The unadjusted Purchase Index increased 8 percent compared with the previous week and was 11 percent higher than the same week one year ago.
“The 10-year Treasury yield fell around 20 basis points over the course of last week, driven mainly by growing concerns over a likely slowdown in Chinese economic growth from the spread of the coronavirus. This drove mortgage rates lower, with the 30-year fixed rate decreasing for the fifth time in six weeks to 3.71 percent, its lowest level since October 2016,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Refinance activity jumped as a result, with an increase in the number of applications and a spike in the average loan amount, as homeowners with jumbo loans reacted more resoundingly to lower rates.”
Added Kan, “Prospective buyers weren’t as responsive to the decline in mortgage rates – likely because of suppressed supply levels. Purchase applications took a step back, but still remained 7.7 percent higher than a year ago.”
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.71 percent from 3.81 percent, with points remaining unchanged at 0.28 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
The first graph shows the refinance index since 1990.
With lower rates, we saw a sharp increase in refinance activity, but mortgage rates would have to decline further to see a huge refinance boom.
The second graph shows the MBA mortgage purchase index
According to the MBA, purchase activity is up 11% year-over-year.
Posted by Calculated Risk on 2/05/2020 07:00:00 AM