A real estate agent shows a house to a potential buyer in Miami.
Mortgage volume appears to be settling into a new normal as demand for refinancing remains high and purchase demand is at its five-year low.
Total mortgage application volume fell 0.3% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. The volume was 70% higher than a year ago, but it was all because of the refinancings.
Refinancing demand fell 1% on the week, but was significantly higher by 225% than a year ago, when interest rates were more than 1 percentage point higher. The demand for refinancing is also increasing, as some homeowners want to withdraw money from their homes, fearing the economic downturn could get worse.
The average contractual interest rate for 30-year fixed rate mortgages with compliant loan balances of $ 510,400 or less remained unchanged at 3.45%, as was the point at 0.29, including set-up fee, for loans with a down payment of 20%. This is a low for the survey, which began in 1990.
Mortgage applications for the purchase of a home were up 2% for the week, but were 31% lower than a year ago.
“The economic shutdown linked to the pandemic has caused some buyers and sellers to delay their decisions until there are signs of a recovery,” said Joel Kan, MBA economist. “This resulted in reduced traffic from buyers, lower inventories and sales of existing homes in March which fell to their slowest annual pace in nearly a year.”
California and Washington, two of the states hardest hit by the coronavirus, saw mortgage demand rise but were still more than 40% lower than the same week a year ago. Demand in New York, which is experiencing the worst of the pandemic, continued to decline.
The refinancing share of mortgage activity fell to 75.4% of total applications, from 76.2% the previous week. The activity share of adjustable rate mortgages increased to 2.8% of total applications.