Mortgage Activity Surges as Interest Rates Continue to Fall Amid Economic Uncertainty

Mortgage Interest Rates Drop

Mortgage interest rates continue to fall and, in response to the current rate environment, the Mortgage Bankers Association forecasts a dramatic jump in activity.

In this week’s Weekly Mortgage Applications Survey, the MBA projected that total origination activity is expected to come in around $2.61 trillion in 2020, a 20.3% increase from last year.

Meanwhile, refinance activity is expected to double from the MBA’s original projections, accounting for around $1.23 trillion. For their part, purchase applications are expected to rise just over 8% to $1.38 trillion.

At the same time, the Market Composite Index, a measure of mortgage loan application volume, increased to its highest levels since April 2009 on a seasonally-adjusted basis. The Refinance Index also increased to its highest levels since April 2009, up 479% over the last week.

On the jump in activity, Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, said: “Market uncertainty around the coronavirus led to a considerable drop in U.S. Treasury rates last week, causing the 30-year fixed rate to fall and match its December 2012 survey low. of 3.47%. “

As for what he foresees happening in the future, he said, “As lenders handle the wave in applications and manage capacity, mortgage rates will likely stabilize, but remain low for now. This, in turn, will support borrowers looking to refinance or purchase a home this spring.”

Looking at activity by loan product, FHA and USDA loan applications decreased for the week, while VA applications rose to 13.1% from 10.5%.

More in Mortgage and Housing News

  • FHFA takes steps to remind servicers of mortgage relief options as coronavirus spreads: In a statement, Director Mark Calabria reminded mortgage servicers that hardship forbearance is an option for borrowers who are unable to make their monthly mortgage payment.
  • CoreLogic reports that mortgage delinquency rates fell to historically low levels: In its latest report looking back at December 2019, CoreLogic found that mortgage delinquency rates fell to their lowest percentage in 20 years.
  • New housing data from Nationwide forecasts a strong 2020, although says COVID-19 is a risk: Data from the latest Health of Housing Markets Report (HoHM Report) from Nationwide economics finds the U.S. housing sector is expected to continue to be a source of growth for the overall economy in 2020, but points to coronavirus as an emerging risk.
  • According to Fannie Mae, consumer confidence in housing remains near all-time high, despite slight slip: The Fannie Mae Home Purchase Sentiment Index dipped slightly in February to 92.5 but remained near its survey high of 93.8.

The Week in Mortgage Rates

This week, interest rates dropped on all mortgage products across the board.

Here a closer look at how the rates changed by loan product:

  • All 30-year, fixed-rate loans: 3.47%, 0.27 points
  • Jumbo 30-year, fixed-rate loans: 3.58%, 0.20 points
  • FHA 30-year, fixed-rate loans: 3.57%, 0.25 points
  • 15-year, fixed-rate loans: 2.90%, 0.26 points
  • 5/1 ARMs: 3.02%, 0.25 points

Be sure to check back next week for the latest interest rate and mortgage news updates.

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By Tara Mastroeni / March 13th, 2020 / Categories: , , / Tags:

Tara Mastroeni

Tara Mastroeni is a real estate and personal finance writer. Find her at TMRealEstateWriter.com or on Twitter at @TaraMastroeni.