Mortgage application activity flat, but purchase volume picks up
Mortgage applications decreased 0.3% from one week earlier, although purchase activity was higher for the first time in six weeks, according to the Mortgage Bankers Association.
The MBA's Weekly Mortgage Applications Survey for the week ending April 17 found that the refinance index decreased 1% from the previous week but was 225% higher than the same week one year ago. The refinance share of mortgage activity decreased to 75.4% of total applications from 76.2% the previous week.
"Mortgage applications were essentially unchanged last week, as a slight drop in refinance activity was offset by a 2% increase in purchase applications. California and Washington, two states hit hard by COVID-19, saw another week of rising activity — partly driving the overall increase. Despite the weekly gain, the purchase index remained close to its lowest level since 2015, and was over 30% lower than a year ago," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release.
Washington had a 12.3% increase in application volume from the prior week, while California had a 2.9% rise. However compared with the same week in 2019, there were 45.8% fewer applications for properties located in Washington and 47.9% less for California.
"The pandemic-related economic stoppage has caused some buyers and sellers to delay their decisions until there are signs of a turnaround. This has resulted in reduced buyer traffic, less inventory, and March existing-homes sales falling to their slowest annual pace in nearly a year," Kan said.
"Despite the 30-year fixed rate remaining at a record low in MBA’s survey, the refinance index dropped slightly last week but remained close to its 2013 highs. Borrowers continue to take advantage of low rates to gain some monthly savings, which is a welcome reprieve during these tough economic times."
Adjustable-rate mortgage activity increased to 2.8% from 2.7% of total applications, while the share of Federal Housing Administration-insured loan applications increased to 10.3% from 9.5% the week prior.
The share of applications for Veterans Affairs-guaranteed loans decreased to 13.8% from 14.3% and the U.S. Department of Agriculture/Rural Development share remained unchanged from 0.4% the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) remained unchanged at 3.45%, the lowest since the MBA started tracking this data. However, rates for the 30-year jumbo (greater than $510,400) FRM continued to rise, as the average contract rate increased 1 basis point to 3.81%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased 12 basis points to 3.33%. For 15-year fixed-rate mortgages, the average decreased 1 basis point to 3.03%. The average contract interest rate for 5/1 ARMs decreased 5 basis points to 3.29%.