The Mortgage Bankers Association’s Weekly Application Survey shows a weekly increase in the Market Composite Index by 15.1% on a seasonally adjusted basis. The Refinance Index soared 26.0% from the previous week and the Purchase index decreased 2.7%. Looking at the Refinance series since its inception, the latest 10-week sprint of over 160% is the largest since January 2009 when it increased 170%.
While economic conditions remain positive, the coronavirus has rattled financial markets and created uncertainty. The financial volatility plunged the 10-year Treasury to below 1%, which in turn brought down the 30-year fixed rate mortgage. It declined to the lowest level in more than seven years, decreasing from the previous week to 3.57%. The Mortgage Bankers Association expects refinancing activity to increase further until virus fears subside and rates stabilize.
The Federal Reserve also enacted this week a 50 basis point-cut in the target range for the federal funds rate. This was the first time since October 2008 that the Federal Reserve’s Open Market Committee enacted such a change outside their typical meeting schedule.