Purchase Mortgage Apps Drop 11 Percent Nationwide

In another indication the coronavirus is softening the housing market, applications for purchase mortgages fell by 11 percent nationwide last week, according to the Mortgage Bankers Association. At the same time, refinancings saw continued strong interest following another drop in mortgage rates

The Mortgage Bankers Association’s seasonally adjusted Purchase Index decreased 11 percent for the week ending March 27, compared to one week earlier. The unadjusted Purchase Index decreased 10 percent compared with the previous week and was 24 percent lower than the same week one year ago. The group’s Refinance Index increased 26 percent from the previous week and was 168 percent higher than the same week one year ago, reflecting the big drop in mortgage rates that took place over the course of 2019 and early 2020.

All mortgage applications increased 15.3 percent on a seasonally adjusted basis from one week earlier, according to the MBA’s Weekly Mortgage Applications Survey. The jump followed a week where the coronavirus pandemic hit large parts of America and applications for mortgages dropped 30 percent from the prior week. On an unadjusted basis, the MBA’s Market Composite Index increased 15 percent compared with the previous week.

“Mortgage rates and applications continue to experience significant volatility from the economic and financial market uncertainty caused by the coronavirus crisis. After two weeks of sizeable increases, mortgage rates dropped back to the lowest level in MBA’s survey, which in turn led to a 25 percent jump in refinance applications,” MBA Associate Vice President of Economic and Industry Forecasting Joel Kan said in a statement. “The bleaker economic outlook, along with the first wave of realized job losses reported in last week’s unemployment claims numbers, likely caused potential homebuyers to pull back. Purchase applications were down over 10 percent, and after double-digit annual growth to start 2020, activity has fallen off last year’s pace for two straight weeks.”

The data suggests home sales will be slower this spring, Kan added.

The refinance share of mortgage activity increased to 75.9 percent of total applications from 69.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 3.2 percent of total applications.