Mortgage application volume jumped an impressive 55.4% during the week ended March 6, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey.
Applications for refinances increased 79% while applications for purchases increased 6%.
Driving the increase in volume was a significant drop in mortgage rates resulting from market volatility caused by coronavirus. The average rate for a 30-year fixed-rate mortgage was 3.47%, down from 3.57% the previous week.
That’s the lowest average rate for the 30-year since the inception of the survey in December 2012, the MBA says.
According to data from Freddie Mac, mortgage rates hit the lowest level ever around Thanksgiving 2012, when the average rate for a 30-year fell to 3.31%.
As a result of the drop in rates, the MBA is now predicting that total mortgage originations will reach around $2.61 trillion this year – an increase of 20.3% compared with 2019.
Refinance originations are expected to double, jumping 36.7% to around $1.23 trillion, while purchase originations are forecasted to rise 8.3% to $1.38 trillion.
“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 percent,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “Homeowners rushed in, with refinance applications jumping 79 percent – the largest weekly increase since November 2008.
“With last week’s increase, the refinance index hit its highest level since April 2009,” Kan says. “The purchase market also had a solid week, with activity nearly 12 percent higher than a year ago. Prospective buyers continue to be encouraged by improving housing inventory levels in some markets and very low rates.”
“Taking into the account the current economic situation and how much rates have fallen, MBA is nearly doubling its 2020 refinance originations forecast to $1.2 trillion, a 37 percent increase from 2019 and the strongest refinance volume since 2012,” Kan adds. “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.”
The refinance share of mortgage activity increased to 76.5% of total applications – up from 66.2% the previous week.
The adjustable-rate mortgage (ARM) share of activity decreased to 5.9% of total applications.