Homeowners are hot to refinance
Overall mortgage applications rose 15.3% in the week ending March 27, the Mortgage Bankers Association said Wednesday.
The increase was led by a big comeback in demand for refinance loans, as homeowners seized on opportunities to refinance and save. Refi applications surged 26% last week, after tumbling 34% a week earlier.
"Mortgage rates and applications continue to experience significant volatility from the economic and financial market uncertainty caused by the coronavirus crisis," says Joel Kan, the associate vice president of forecasting for the Mortgage Bankers Association, in a news release.
Last week's refinance requests to lenders were up 168% from a year earlier — which means the volume of applications was more than two and a half times heavier than during the same week in 2019.
Meanwhile, applications for so-called purchase loans — to buy homes — sank 10% last week.
"The bleaker economic outlook, along with the first wave of realized job losses reported in last week's unemployment claims numbers, likely caused potential homebuyers to pull back," Kan says.
Refinances accounted for a hefty 75.9% of all mortgage activity last week, compared to 69.3% the week before.
Use our mortgage calculator below to how much you might save with a refinance into one of today's low mortgage rates.
Lower rates spark the latest refi rush
As Americans come to grips with coronavirus business closures and layoffs, U.S. homeowners are realizing that falling mortgage rates can allow them to shrink their monthly budgets by refinancing.
Average rates on 30-year fixed-rate mortgages recently hit a record low of 3.29% in the nearly 50-year-old weekly survey from mortgage giant Freddie Mac.
Rates bounced higher for a couple of weeks in mid-March, then dropped to an average 3.50% last week. Freddie Mac releases a fresh mortgage rates update on Thursday.
The Mortgage Bankers Association does its own survey, and Kan says it shows rates have gone back to all-time lows following two weeks of "sizable increases."
Experts say steps taken by the Federal Reserve helped bring the return to lower mortgage rates.
As part of its multipronged economic defense against the coronavirus and its COVID-19 disease, the central bank cut a key short-term interest rate to near zero and indicated it would buy up Treasury bonds and mortgage-backed securities in unlimited quantities.
Freddie Mac's chief economist, Sam Khater, says the federal government's $2 trillion coronavirus relief package also should "provide substantial support to the mortgage markets" as it stimulates the economy.
The measure signed Friday by President Donald Trump includes up to $350 billion in forgivable loans for small businesses, a $500 billion fund to help larger companies and whole industries, up to $1,200 in cash payments for most Americans, and a giant expansion of unemployment benefits.