What was expected to be a spring storm in the housing market has dried to a trickle. With uncertainty surrounding the spread of the coronavirus and job stability, many who may have been considering buying a home are now waiting to see how the COVID-19 pandemic unfolds. Even with renewed efforts by the real estate industry thanks to virtual tools, mortgage applications dropped 24 percent annually last week. And the drop is even more pronounced in states that are the hardest hit by the coronavirus pandemic: New York City’s mortgage applications were down over 30 percent.
The coronavirus appears to be splitting the mortgage market: More borrowers are refinancing to save money on monthly payments, while potential homebuyers are backing away fast.
Driven entirely by refinancing, total mortgage application volume increased 15.3% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume was 67% higher than one year ago, when interest rates were higher.
After rising for two weeks, mortgage rates plunged to the lowest level in the MBA’s survey. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.47% from 3.82%, with points decreasing to 0.33 from 0.35 (including the origination fee) for loans with a 20% down payment. That rate was 89 basis points higher one year ago.