Mortgage Apps: Refi Apps Fall As Shutdowns Continued

April 8, 2020
Bottom Line: Mortgage activity fell sharply last week, despite the average 30-year fixed-rate mortgage holding below 3.5% for the second straight week. Shutdowns continued across wide swaths of the country last week and in some large states like Florida were initiated for the first time. Bank staffing and remote working have made processing applications more difficult. Additionally, Friday was the first day banks were expected to process Paycheck Protection Program ("PPP") loan applications (the government program to offer loans to small businesses for maintaining payroll during the shutdowns). Reports from many banks suggested there were substantial bottlenecks in processing these applications, likely resulting in a shift in resources away from mortgage towards PPP loans. Overall, borrowers are still eager to submit applications for refinancing but are starting to experience some impediments in the current environment. The data also suggest that purchase activity has turned sharply lower -- the four-week average for purchase application fell to its lowest level since in 18 months. While realtors were deemed "essential" and able to work through shelter-in-place restrictions in some regions, activity remains extremely depressed for now. The MBA Mortgage Applications Index FELL by 17.9% during the week ended April 3 to 718.2, modestly below its 13 week average of 761.0 but 51.0% ABOVE its year-ago level. The Purchase Index FELL by 12.2% to 185.9, sharply below its 13 week average of 266.0 and 33.2% BELOW its year-ago level. The Refinance Index FELL by 19.4% to 3,853. With this decline, refinancing activity is modestly above its 13 week average of 3,651 and 143.5% ABOVE its year-ago level. Contract Mortgage Rates were MIXED with the 30-year fixed rate increasing by 2 bps to 3.49% and the 15-year fixed rate declining by 1 bp to 3.04%.