The Mortgage Business Association (MBA) reported mortgage applications rose 15.1% for the week ending on February 28 from the prior week.
According to the report, the refinance index increased 26% from the previous week and was 224% higher than the same week in 2019. The purchase index, though, dropped 3% from the prior week.
"The 30-year fixed-rate mortgage dropped to its lowest level in more than seven years last week, amidst increasing concerns regarding the economic impact from the spread of the coronavirus, as well as the tremendous financial market volatility. Refinance demand jumped as a result, with conventional refinance applications increasing more than 30 percent," said Mike Fratantoni, MBA's SVP and Chief Economist. "Given the further drop in Treasury rates this week, we expect refinance activity will increase even more until fears subside and rates stabilize."
Fratantoni added that while the purchase index fell from the prior week, they are up 10% from the year prior.
“The next few weeks are key in whether these low mortgage rates bring in more buyers, or if economic uncertainty causes some home shoppers to temporarily delay their search,” he said.
Refinances now represent 66.2% of the mortgage activity for the week—an increase from 60.8% from the prior week.
The FHA share of total applications fell to 9.3% from 10.5% and the VA share fell from 11.8% to 10.5%.
Ellie Mae’s January Millennial Tracker reported that the average interest rate on loans closed by millennials fell slightly to 3.94% from 3.95%.
Thirty-one percent of loans closed by millennials were refinancing, which is up from December 2019’s 27%.
Ellie Mae also announced that all millennial data for 2020 will be broken into two sub-groups—older millennials (ages 30-40) and younger millennials (ages 21-29).
The refinance share of older millennials was 38% compared to 17% for younger millennials.
“Millennials are expected to fuel the housing market in 2020 and it’s vital that lenders understand how to market to and work with this demographic,” said Ellie Mae COO Joe Tyrrell. “We know that millennials prefer working with lenders who provide a blend of high-touch human interaction and automated processes, but as this demographic grows and ages up, the most successful lenders will be those that understand the nuances between older and younger millennials and adjust their strategies based on this insight.”
CoreLogic noted that the average mortgage payment fell 6.8% in December 2019 due to a 20% decline in mortgage rates. The average sales price, though, rose 4% to $225,723 and it is the eighth consecutive month that mortgage payments fell annually.
Mortgage rates have fallen from 4.64% in December 2018 to 3.72% in December 2019.
CoreLogic’s Home Price Index (HPI) and HPI Forecast predicts home prices will rise in 2020 by an average of 4.6%. Mortgage payments are expected to increase just 2.7% during the year as rates are predicted to be 0.2 percentage points lower than the year prior.