Mortgage applications increased 55.4% from one week earlier, according to data from the Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ending March 6, 2020.
In response to the current interest rate environment, MBA now forecasts total mortgage originations to come in around $2.61 trillion this year - a 20.3% gain from 2019's volume ($2.17 trillion). Refinance originations are expected to double earlier MBA projections, jumping 36.7% to around $1.23 trillion. Purchase originations are now forecasted to rise 8.3% to $1.38 trillion.
The Market Composite Index, a measure of mortgage loan application volume, increased 55.4% on a seasonally adjusted basis from one week earlier to the highest level since April 2009. On an unadjusted basis, the Index increased 54% compared with the previous week. The Refinance Index increased 79% from the previous week to the highest level since April 2009, and was 479% higher than the same week one year ago. The seasonally adjusted Purchase Index increased 6% from one week earlier. The unadjusted Purchase Index increased 7% compared with the previous week and was 12% higher than the same week one year ago.
"Market uncertainty around the coronavirus led to a considerable drop in U.S. Treasury rates last week, causing the 30-year fixed rate to fall and match its December 2012 survey low of 3.47%. Homeowners rushed in, with refinance applications jumping 79% - the largest weekly increase since November 2008," said Joel Kan, MBA's associate vice president of economic and industry forecasting. "With last week's increase, the refinance index hit its highest level since April 2009. The purchase market also had a solid week, with activity nearly 12% higher than a year ago. Prospective buyers continue to be encouraged by improving housing inventory levels in some markets and very low rates."
Added Kan, "Taking into the account the current economic situation and how much rates have fallen, MBA is nearly doubling its 2020 refinance originations forecast to $1.2 trillion, a 37% increase from 2019 and the strongest refinance volume since 2012. As lenders handle the wave in applications and manage capacity, mortgage rates will likely stabilize but remain low for now. This in turn will support borrowers looking to refinance or purchase a home this spring."
The refinance share of mortgage activity increased to 76.5% of total applications from 66.2% the previous week. The adjustable-rate mortgage ARM share of activity decreased to 5.9% of total applications.
The FHA share of total applications decreased to 6.9% from 9.3% the week prior. The VA share of total applications increased to 13.1% from 10.5% the week prior. The USDA share of total applications decreased to 0.3% from 0.4% the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to the lowest level since December 2012, equaling the lowest level in survey history at 3.47%, from 3.57% with points increasing to 0.27 from 0.26 (including the origination fee) for 80% loan-to-value ratio LTV 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 the lowest level since the series was added in 2011, 3.58%, from 3.63% with points decreasing to 0.20 from 0.21 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.57% from 3.74%, with points remaining unchanged at 0.25 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.90% from 3.03%, with points increasing to 0.26 from 0.24 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The average contract interest rate for 5/1 ARMs decreased to 3.02% from 3.12%, with points increasing to 0.25 from 0.14 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
