Despite wider-than-usual daily swings last week, mortgage rates dropped to the lowest level ever in the Mortgage Bankers Association’s 30-year-old weekly survey, causing yet another rush to refinance, CNBC reported.
Mortgage applications to purchase a home fell for the fifth straight week, down 2% from one week early and down a striking 35% from a year ago.
Mortgage applications increased 7.3 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.
The Market Composite Index, a measure of mortgage loan application volume, increased 7.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 7 percent compared with the previous week.
The Refinance Index increased 10 percent from the previous week and was 192 percent higher than the same week one year ago.
"The 30-year fixed mortgage rate decreased last week to the lowest level in MBA's survey at 3.45 percent. The decline in rates - despite Treasury yields rising - is a sign that the mortgage-backed securities (MBS) market is stabilizing and lenders are successfully working through their lending pipelines," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting.
"Refinance activity has experienced a volatile four-week period, but did increase 10 percent last week. Refinancing will continue to be beneficial for the many borrowers able to lower their monthly payments during this time of economic distress."
Added Kan, "Purchase applications decreased less than 2 percent last week - the fifth straight weekly decline. Compared to the first week of March, the purchase index was down around 35 percent, as the economic downturn and nationwide mitigation practices to slow the spread of COVID-19 have disrupted the spring homebuying 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."
The refinance share of mortgage activity increased to 76.2 percent of total applications from 74.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 2.7 percent of total applications.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.45 percent from 3.49 percent. That’s the lowest level since the MBA began its weekly applications survey in 1990, CNBC explained.
The average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 3.04 percent.
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