Record low mortgage rates spur rise in refinance apps

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Mortgage application volume increased 7.3% over the prior week, as rates for the 30-year fixed loan reached the lowest level since the Mortgage Bankers Association started tracking this information.

The MBA's Weekly Mortgage Applications Survey for the week ending April 10 found that the refinance index increased 10% from the previous week and was 192% higher than the same week one year ago. The refinance share of mortgage activity increased to 76.2% of total applications from 74.2% the previous week.

"The 30-year fixed mortgage rate decreased last week to the lowest level in MBA's survey at 3.45%. The decline in rates — despite Treasury yields rising — is a sign that the mortgage-backed securities market is stabilizing and lenders are successfully working through their lending pipelines," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release. "Refinance activity has experienced a volatile four-week period, but did increase 10% last week. Refinancing will continue to be beneficial for the many borrowers able to lower their monthly payments during this time of economic distress."

"Purchase applications decreased less than 2% last week — the fifth straight weekly decline. Compared to the first week of March, the purchase index was down around 35%, as the economic downturn and nationwide mitigation practices to slow the spread of COVID-19 have disrupted the spring home-buying season. The purchase market is still expected to rebound, as long as the public health measures to reduce the pandemic’s spread are successful and result in a broader recovery," Kan said.

Adjustable-rate mortgage activity decreased to 2.7% from 3.3% of total applications, while the share of Federal Housing Administration-insured loan applications decreased to 9.5% from 10.6% the week prior.

The share of applications for Veterans Affairs-guaranteed loans remained unchanged 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) decreased 4 basis points to 3.45%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400), the average contract rate decreased 7 basis points to 3.8%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased 9 basis points to 3.45%. For 15-year fixed-rate mortgages, the average remained unchanged at 3.04%. The average contract interest rate for 5/1 ARMs decreased 5 basis points to 3.34%.

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