The Mortgage Bankers Association’s (MBA) latest Weekly Application shows an uptick in applications for the week ending July 10, 2020. The Market Composite Index increased by 5.1% from the previous week on a seasonally adjusted basis, owing mainly to the surge in refinancing activity of 11.9% compared to a week before. The increase was partially offset by the slowdown of purchasing activity by 6.1%. The MBA’s 30-year fixed-rate mortgage rate fell to a new record low of 3.19%, sliding by 7 basis points from the previous week. Refinance applications increased slightly, of which the main contributor was the increase in conventional refinances.
Throughout the pandemic, the weekly fluctuations have underrepresented the outsized gains seen in mortgage activity as measured on a year-over-year basis. On an unadjusted basis, the current Purchase Index was 16% higher than what it was the same week one year ago while the Refinance Index was 107% higher than what it was the same week one year ago. Also, on a year-over-year basis, the Refinance and Purchase Indexes have moved in tandem with each other since the beginning of 2019 (as shown below) until the end of the first quarter of 2020, the period that coincided with the pandemic, which may be indicative of liquidity-strapped homeowners’ behavior in economic recessions, as well as solid demand for remodeling.
Notably, the refinance share of mortgage activity increased to 64.2 percent of total applications from 60.1 percent in the previous week. The MBA notes that refinance loan balances climbed to a high last seen in March. By dollar volume, refinance activity increased, on an unadjusted basis, by 28.1% from the previous week while purchase activity increased by 2.1%.