Mortgage application volume increased 5%, led by refinancings, as interest rates continued to fall on fears that the coronavirus was spreading in China and elsewhere, according to the Mortgage Bankers Association.
The MBA's Weekly Mortgage Applications Survey for the week ending Jan. 31 found that the refinance index increased 15% from the previous week and was 183% higher than the same week one year ago. The previous week's results included an adjustment for the Martin Luther King Jr. holiday.
The seasonally adjusted purchase index decreased 10% from one week earlier, while the unadjusted purchase index increased 8% compared with the previous week and was 11% higher than the same week one year ago.
"The 10-year Treasury yield fell around 20 basis points over the course of last week, driven mainly by growing concerns over a likely slowdown in Chinese economic growth from the spread of the coronavirus," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release. "This drove mortgage rates lower, with the 30-year fixed rate decreasing for the fifth time in six weeks to 3.71%, its lowest level since October 2016.""Refinance activity jumped as a result, with an increase in the number of applications and a spike in the average loan amount, as homeowners with jumbo loans reacted more resoundingly to lower rates. Prospective buyers weren’t as responsive to the decline in mortgage rates — likely because of suppressed supply levels. Purchase applications took a step back, but still remained 11% higher than a year ago."
The refinance share of mortgage activity increased to 64.5% of total applications from 60.4% the previous week.
Adjustable-rate mortgage activity increased to 5.9% from 4.7% of total applications, while the share of Federal Housing Administration-insured loan applications decreased to 9.6% from 10.7% the week prior.
The share of applications for Veterans Affairs-guaranteed loans decreased to 10.2% from 11.7% and the U.S. Department of Agriculture/Rural Development share decreased to 0.4% from 0.5%.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased 10 basis points to 3.71%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400), the average contract rate decreased 8 basis points to 3.7%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased 2 basis points to 3.8%. For 15-year fixed-rate mortgages, the average decreased 5 basis points to 3.19%. The average contract interest rate for 5/1 ARMs increased to 3.23% from 3.15%.
