Purchase Applications Down 33% From Last Year

Another day, another rough report for the housing market, as lower interest rates were not enough to overcome the headwinds of the coronavirus pandemic last week.

The Mortgage Bankers Association’s weekly survey released Wednesday showed that mortgage applications dropped 17.9 percent from a week earlier. The weekly purchase index dropped 12 percent from a week earlier and was 33 percent lower than a year ago.

“Mortgage applications fell last week, as economic weakness and the surge in unemployment continues to weigh heavily on the housing market. Purchase activity declined again, with the index dropping to its lowest level since 2015 and now down 33 percent compared to a year ago,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.

In coronavirus hotspots, the drops were even more severe. In New York, purchase applications were down 31.3 percent for the week after falling 18.1 percent the week before – and stood 55.4 percent below levels from a year ago. Washington purchase applications are down 59.9 percent, while they’ve fallen 47.5 percent in California from 2019 levels.

Other findings include:

  • The refinance index fell 19 percent – though was still 144 percent higher than a year ago.
  • The refinance share of mortgage activity decreased to 74.2 percent of total applications from 75.9 percent the previous week.
  • The adjustable-rate mortgage (ARM) share of activity increased to 3.3 percent of total applications. 

Finally, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 3.49 percent from 3.47 percent, with points decreasing to 0.28 from 0.33 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate remained unchanged from last week.