U.S. Mortgage Applications Volume Plunges in Late March

According to the Mortgage Bankers Association's latest Weekly Mortgage Applications Survey for the week ending April 3, 2020, U.S. mortgage applications decreased 17.9 percent from one week earlier.

In the middle of the COVID-19 pandemic, the U.S. Market Composite Index, a measure of mortgage loan application volume, decreased 17.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 18 percent compared with the previous week.

The Refinance Index decreased 19 percent from the previous week and was 144 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 12 percent from one week earlier. The unadjusted Purchase Index decreased 12 percent compared with the previous week and was 33 percent lower than the same week one year ago.

"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."

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."

The refinance share of mortgage activity decreased to 74.2 percent of total applications from 75.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 3.3 percent of total applications.

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 FHA share of total applications increased to 10.6 percent from 9.1 percent the week prior. The VA share of total applications increased to 14.3 percent from 12.5 percent the week prior. The USDA share of total applications remained unchanged from 0.4 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 3.49 percent from 3.47 percent, with points decreasing to 0.28 from 0.33 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate remained unchanged from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) increased to 3.87 percent from 3.84 percent, with points decreasing to 0.26 from 0.31 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.54 percent from 3.57 percent, with points decreasing to 0.19 from 0.28 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.04 percent from 3.05 percent, with points decreasing to 0.25 from 0.27 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs increased to 3.39 percent from 3.35 percent, with points increasing to -0.02 from -0.03 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.