Mortgage applications are down from last week, but an increase in purchase application activity might be hinting at an upturn in the spring homebuying season that was delayed by the coronavirus outbreak.
The Mortgage Banker Association's Market Composite Index showed a 3.3% seasonally adjusted drop in mortgage loan application volume. On an unadjusted basis, mortgage applications were 2% lower than the previous week.
However, despite tighter credit availability, the seasonally adjusted purchase index rose 12% week over week and was up 13% on an unadjusted basis. The refinance index, on the other hand, fell 7% from a week ago and was 218% higher than the same week a year ago.
"The 10 largest states had increases in purchase activity, which is potentially a sign of the start of an upturn in the pandemic-delayed spring homebuying season, as coronavirus lockdown restrictions slowly ease in various markets," said Joel Kan, associate vice president of economic and industry forecasting at MBA. "California and Washington continued to show increases in purchase activity, with New York seeing a significant gain after declines in five of the last six weeks."
The refinance share of total applications fell from 75.4% to 71.6%, while the adjustable-rate mortgage share of activity rose to 2.9%.
The FHA share represented 11.5%, up from 10.3% the week prior. The VA share of total applications declined to 13.3% from 13.8% last week. The USDA share of total applications inched up to 0.5% from 0.4%.
"Contributing to the uptick in purchase applications was that mortgage rates fell to another record low in MBA's survey, with the 30-year fixed-rate decreasing to 3.43%," Kan said. "However, refinance activity declined 7%, as rates for refinances likely remained higher than those for purchase loans. Lenders are still working through pipelines at capacity, and observed changes in credit availability for refinance loans have also, in turn, impacted rates."