Global| Apr 01 2020U.S. Mortgage Applications Rebound, Led by Refinancing
by:Sandy Batten
|in:Economy in Brief
Summary
Led by a sharp increase in refinancing applications, the Mortgage Bankers Association's Mortgage Loan Application Index rebounded in the week ended March 27, rising 15.3% w/w (73.7% y/y) after having fallen 29.4% w/w in the previous [...]
Led by a sharp increase in refinancing applications, the Mortgage Bankers Association's Mortgage Loan Application Index rebounded in the week ended March 27, rising 15.3% w/w (73.7% y/y) after having fallen 29.4% w/w in the previous week and 8.4% w/w in the week ended March 13. Purchase applications remained weak (-10.8% w/w and -23.5% y/y) as the first signs of the devastating hit to employment from the spreading coronavirus likely caused potential homebuyers to pull back. In contrast, with mortgage interest rates falling to series lows for some rates, applications for refinancing jumped up 25.5% w/w (167.7% y/y) after having declined 40.7% in the previous two weeks. The refinance share of mortgage activity increased to 75.9% of total applications from 69.3% the previous week. The adjustable-rate mortgage share of activity decreased to 3.2% of total applications.
The effective interest rate on a 15-year fixed-rate mortgage fell markedly to 3.12% in the week ended March 27 from 3.38% the previous week. The effective interest rate on the 30-year fixed-rate mortgage slumped to 3.57%, the lowest rate in the history of the series, from 3.93%. In contrast, the effective rate on a 30-year Jumbo mortgage only edged down 2 basis points to 3.93% after having risen 31 basis points in the previous two weeks. The rate on the 5-year adjustable rate mortgage fell to 3.34% from 3.48%.
The average mortgage loan size fell to $323,700 in the week ended March 27 from $337,000 the previous week. The average loan size of refinancings declined to $322,800 from $337,500. The average loan size for purchases fell to $326,500 from $336,000.
Applications for fixed-rate loans were up 85.8% y/y, while applications for adjustable rate loans fell 41.9% y/y.
The survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for each index is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver's SURVEYW database.
| MBA Mortgage Applications (%, SA) | 03/27/20 | 03/20/20 | 03/13/20 | Y/Y | 2019 | 2018 | 2017 |
|---|---|---|---|---|---|---|---|
| Total Market Index | 15.3 | -29.4 | -8.4 | 73.7 | 32.4 | -10.4 | -17.8 |
| Purchase | -10.8 | -14.6 | -0.9 | -23.5 | 6.6 | 2.1 | 5.6 |
| Refinancing | 25.5 | -33.8 | -10.4 | 167.7 | 71.1 | -24.3 | -34.0 |
| 15-Year Effective Mortgage Interest Rate (%) | 3.12 | 3.38 | 3.20 | 3.88 | 3.71 | 4.35 | 3.59 |
| 30-Year Effective Mortgage Interest Rate (%) | 3.57 | 3.93 | 3.85 | 4.49 | 4.34 | 4.94 | 4.32 |
Sandy Batten
AuthorMore in Author Profile »Sandy Batten has more than 30 years of experience analyzing industrial economies and financial markets and a wide range of experience across the financial services sector, government, and academia. Before joining Haver Analytics, Sandy was a Vice President and Senior Economist at Citibank; Senior Credit Market Analyst at CDC Investment Management, Managing Director at Bear Stearns, and Executive Director at JPMorgan. In 2008, Sandy was named the most accurate US forecaster by the National Association for Business Economics. He is a member of the New York Forecasters Club, NABE, and the American Economic Association. Prior to his time in the financial services sector, Sandy was a Research Officer at the Federal Reserve Bank of St. Louis, Senior Staff Economist on the President’s Council of Economic Advisors, Deputy Assistant Secretary for Economic Policy at the US Treasury, and Economist at the International Monetary Fund. Sandy has taught economics at St. Louis University, Denison University, and Muskingun College. He has published numerous peer-reviewed articles in a wide range of academic publications. He has a B.A. in economics from the University of Richmond and a M.A. and Ph.D. in economics from The Ohio State University.
