Despite Virus, Mortgage Applications Up In March

Low mortgage rates and hot start to the month were enough to push new mortgage applications in March up 21.2 percent over a year ago, according to a Mortgage Bankers Association survey released Tuesday.

The MBA’s Builder Application Survey also showed that new mortgage applications increased 14 percent over February, despite the coronavirus pandemic taking hold across the country.

“The strong increase in new home purchase applications was likely because of falling mortgage rates and stronger economic conditions at the start of the month. This boosted activity and offset the coinciding decline once COVID-19-related disruption sapped demand in the following weeks,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. 

The survey also found:

  • MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 697,000 units in March 2020. 
    The seasonally adjusted estimate for March is a decrease of 6.6 percent from the February pace of 746,000 units.
  • On an unadjusted basis, MBA estimates that there were 71,000 new home sales in March, an increase of 10.9 percent from 64,000 new home sales in February. 
  • The average loan size of new homes increased from $340,169 in February to $344,556 in March. 

By product type, conventional loans composed 68.1 percent of loan applications, FHA loans composed 18.6 percent, RHS/USDA loans composed 1.4 percent and VA loans composed 11.9 percent. 

“The seasonally adjusted estimate of new home sales decreased almost 7 percent last month,” Kan said. “Although that is a notable decline, it is not as steep as what has occurred in MBA’s weekly purchase applications data, which covers both the new and existing home markets. It is expected that new home purchases in April will decrease.”