Mortgage Applications Bottom Out In Virus Hotspots

Mortgage applications in coronavirus hotspots appear to have bottomed out in the midst of the pandemic.

After weeks of double-digit decreases, mortgage applications in New York climbed 0.8 percent last week, according to the Mortgage Bankers Association. In Washington state, applications were up 16.4 percent. California saw a 1.8 percent increase. All three states, however, experienced year-over-year decreases of about 50 percent.

Across the country, mortgage applications increased 7.3 percent from a week earlier.

“The purchase market is still expected to rebound, as long as the public health measures to reduce the pandemic’s spread are successful and result in a broader recovery,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.

In an interview with CNBC, Quicken Loans CEO Jay Farner said his company remains extremely busy in the refinance market.

“From a purchase perspective, we have seen applications dip a bit, although there is a lot of prequalification going on,” Farner said. “People are wanting to buy a home. They’re just delayed a bit. From a refinance perspective, the applications have been the strongest we have ever seen.” 

They survey also found:

  • The Refinance Index increased 10 percent from the previous week and was 192 percent higher than the same week one year ago. 
  • The seasonally adjusted Purchase Index decreased 2 percent from one week earlier.
  • The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 35 percent lower than the same week one year ago.
  • The refinance share of mortgage activity increased to 76.2 percent of total applications from 74.2 percent the previous week.
  • The adjustable-rate mortgage share of activity decreased to 2.7 percent of total applications.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.45 percent from 3.49 percent, with points increasing to 0.29 from 0.28 for 80 percent loan-to-value ratio loans. The effective rate decreased from last week.