Teeth of wider-than-usual daily swings last week, mortgage rates dropped to the lowest level ever in the Mortgage Bankers Affiliation’s 30-year-old weekly survey, causing yet another rush to refinance.
Total mortgage application volume rose 7.3% final week from the previous week, according to the MBA’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming allowance balances of $510,400 or less decreased to 3.45% from 3.49%. That’s the lowest level since the MBA began its weekly petitions survey in 1990. Points increased to 0.29 from 0.28, including origination fee, for loans with a 20% down payment. That is 99 essence lower than a year ago.
“The decline in rates — despite Treasury yields rising — is a sign that the mortgage-backed cares market is stabilizing and lenders are successfully working through their lending pipelines,” said Joel Kan, an MBA economist.
That rock-bottom class caused a 10% weekly surge in applications to refinance a home loan. Refinance volume was 192% higher than a year ago.
Low paces did little for homebuyers. Mortgage applications to purchase a home fell for the fifth straight week, down 2% from a week earlier and down a great 35% from one year ago. The spring housing market started early and seems to have ended early because of the profitable downturn and social distancing caused by the coronavirus outbreak. Purchase applications in the states hardest hit — New York, California and Washington — are regarding half that of a year ago.
“The purchase market is still expected to rebound, as long as the public health measures to bring down the pandemic’s spread are successful and result in a broader recovery,” Kan said.
Homebuyers are still out there, doing virtual jaunts and looking for bargains. Freddie Mac put out a cautiously optimistic report, predicting very strong home sales in 2021.
“Undoubtedly, the casing market is facing its greatest challenge in over a decade as our nation weathers this unprecedented economic event,” asseverated Sam Khater, Freddie Mac’s chief economist. “Although the uncertainty of the crisis means forecasts of economic activity are more unclear than accustomed, we expect that most of the economic damage from the virus will be contained to the first half of the year.”