In a report reflecting the “calm before the storm,” the Mortgage Bankers Association announced Wednesday that mortgage applications increased 1.5 percent last week – adjusted for the shortened Presidents’ Day holiday.
On an unadjusted basis, the Market Composite Index – measuring loan application volume – dropped 7 percent from the previous week.
“Last week appears to have been the calm before the storm. Weaker readings on economic growth caused a slight drop in mortgage rates, bringing them back to their level two weeks ago, but applications overall moved 1.5 percent higher,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Refinance applications for conventional loans dropped a bit, but FHA refinances increased more than 22 percent. Purchase volume remained strong, supported both by low rates and the increased pace of construction over the past few months. With housing supply at low levels, new inventory is a positive development for prospective homebuyers.”
Other findings include:
- The Refinance Index decreased 1 percent from the previous week but was 152 percent higher than the same week one year ago – reflecting historically low interest rates.
- The refinance share of mortgage activity decreased to 60.8 percent of total applications from 63.2 percent the previous week.
- The adjustable-rate mortgage (ARM) share of activity decreased to 5.3 percent of total applications.
“As fears regarding the coronavirus have increased, Treasury yields have dropped to record lows this week amid the ensuing financial market volatility,” Fratantoni said. “Next week’s results will show the impact this drop in Treasuries had on mortgage activity.” Read the full MBA report here.