The Mortgage Bankers Association’s latest Weekly Application Survey shows a 15.3% seasonally adjusted rise in loan application volume from the previous week. The Refinance index increased 25.5% from the previous week and was 168% higher than it was the same week one year ago. The Purchase Index decreased 10.8% from one week earlier. The MBA notes that buyer and seller traffic are likely to slow down this spring due to restrictions in in-person activity imposed at the state level in response to the coronavirus outbreak, which had been earlier seen to cause major disruptions to economic activity and financial markets across the nation and the world.
Additionally, prospective home buyers pulled back after a significant wave of job losses, indicated by a surge in unemployment claims. Mortgage rates have followed suit, with the iconic 30-year, fixed-rate mortgage returning to its lowest level in MBA’s survey after two weeks of sizable increases.
As can be seen from the above figure, shortly before the close of the first week of March, refinance activity spiked to a level not seen in over 10 years, most likely precipitated by the dramatic drop in the 10-year Treasury to below 1%. Some market analysts’ research predicts that the stock market has still not reached the low resulting from the current shock from the pandemic.