The negative effects
of the COVID-19 epidemic appear to have set in last week as mortgage
applications, which had managed to increase even after much of the nation's
business shut down, tumbled. The Mortgage Bankers Association (MBA) said its
Market Composite Index, a measure of loan application volume, declined 17.9
percent on a seasonally adjusted basis during the week ended April 3, and 18 percent
lower on an unadjusted basis.
The Refinance
Index decreased 19 percent but was still 144 percent higher than the same week
one year ago. The refinance share of mortgage activity decreased to 74.2
percent of total applications from 75.9 percent the previous week.
Purchase mortgage
applications declined by 12 percent on both an adjusted and an unadjusted basis
from the week ended March 27. The Purchase Index level was 33 percent lower
than during the same week in 2019.
Refi Index vs 30yr Fixed
Purchase Index vs 30yr Fixed
"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. "With much less liquidity and tighter
credit in the jumbo market, average loan sizes declined, and mortgage rates for
jumbo loans increased to a high last seen in January."
For all loans the
average size was $313,200, down from $323,700 a week earlier. Purchase loans
averaged $313,500 compared to $326,500.
Added Kan,
"Refinance applications dropped 19 percent, reversing a 25 percent increase the
week before. Given the ongoing rate volatility, along with the persistent lack
of liquidity in certain sectors of the MBS market, we expect to see continued
weekly swings in refinance activity."
Looking at the
impact at the state level, here are results showing the non-seasonally
adjusted, week-over- week percent change in the number of purchase applications
from Washington, California and New York, the states with the highest numbers
of COVID-19 cases.
|
|
Week-Over-Week Change
|
Year-Over-Year Change
|
|
|
State
|
% Change:
Week
Ending
4/3/2020
|
% Change:
Week
Ending
3/27/2020
|
% Change:
Week
Ending
4/3/2020
|
% Change:
Week
Ending
3/27/2020
|
|
CA
|
(15.9)
|
(16.5)
|
(47.5)
|
(36.4)
|
|
NY
|
(31.3)
|
(18.1)
|
(55.4)
|
(35.6)
|
|
|
WA
|
(38.0)
|
0.6
|
(59.9)
|
(32.5)
|
|
NOTE: Not seasonally adjusted, home purchase
applications only
Source: Mortgage Bankers Association Weekly Applications Survey
The FHA share of
total applications increased to 10.6 percent from 9.1 percent the previous week
and the VA share grew to 14.3 percent from 12.5 percent. The USDA share was unchanged
at 0.4 percent.
Interest rates, both contract and
effective, were mixed. The average contract interest rate for 30-year
fixed-rate mortgages (FRM) with loan balances at or below the conforming limit
of $510,400 increased to 3.49 percent from 3.47 percent, with points decreasing
to 0.28 from 0.33. The effective rate
was unchanged from last week.
The average
contract interest rate for 30-year fixed-rate mortgages with loan balances that
exceeded the conforming limit was 3.87 percent, up from 3.84 percent, with points decreasing to 0.26 from
0.31 The effective rate was higher.
The average
contract interest rate for 30-year FRM backed by the FHA was 3.54 percent with 0.19
point. The prior week the rate was 3.57 percent with 0.28 point. The effective
rate declined.
The rate for
15-year FRM decreased to 3.04 percent from 3.05 percent, with points decreasing
to 0.25 from 0.27. The effective rate decreased from last week.
The average
contract interest rate for 5/1 adjustable rate mortgages (ARMs) moved to 3.39
percent from 3.35 percent, with
points increasing to -0.02 from -0.03. The effective rate also increased. The ARM
share of activity ticked up to 3.3 percent from 3.2 percent.
MBA's Weekly
Mortgage Applications Survey been conducted since 1990 and covers over 75
percent of all U.S. retail residential applications Respondents include
mortgage bankers, commercial banks, and thrifts. Base period and value
for all indexes is March 16, 1990=100 and interest rate information is based on
loans with an 80 percent loan-to-value ratio and points that include the origination
fee.