With applications skyrocketing, the MBA has doubled its projections for refinance apps in 2020
Mortgage applications skyrocketed 55.4% last week to their highest level in more than a decade, according to new data from the Mortgage Bankers Association. With rates tumbling and applications on the rise, the MBA has doubled its projections for refinance originations in 2020.
The MBA’s Market Composite Index, a measure of mortgage application volume, rose 55.4% last week on a seasonally adjusted basis, hitting its highest level since April 2009. On an unadjusted basis, the index rose 54% from the previous week. The Refinance Index rose 79% from the previous week, hitting its highest level since April 2009. The Refinance Index was 479% higher than the same week last year. The seasonally adjusted Purchase Index was up 6% from the previous week.
In response to the current low-interest-rate environment, the MBA is now forecasting mortgage originations for 2020 to total about $2.61 trillion, a 20.3% volume gain from 2019’s volume of $2.17 trillion. Refinance originations are now expected to double earlier MBA projections, jumping 36.7% year over year to $1.23 trillion. Purchase originations are now projected to rise 8.3% to $1.38 trillion for the year.
“Market uncertainty around the coronavirus led to a considerable drop in US Treasury rates last week, causing the 30-year fixed rate to fall and match its December 2012 survey low of 3.47%,” said Joel Kan, MBA associate vice president of economic and industry forecasting. “Homeowners rushed in, with refinance applications jumping 79% – the largest weekly increase since November 2008. With last week’s increase, the Refinance Index hit its highest level since April 2009. The purchase market also had a solid week, with activity nearly 12% higher than a year ago. Prospective buyers continue to be encouraged by improving housing inventory levels in some markets and very low rates.”
Kan said that the tumbling 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.”