Mortgage Apps: Surprised Decline Amid Rate Volatility

Bottom Line: Mortgage activity fell slightly last week with the refi index pulling back from near-record strength as mortgage rates surprisingly rose on average. Amid immense volatility in rates, the average survey rate rose from just below 3.50% to 3.74% for 30-year fixed-rate mortgages. That said, Freddie Mac's commitment rate stayed below 3.40%, suggesting mortgage bankers are reluctant to pass through the entire decline in the mortgage rate as they struggle with volumes and volatility in hedging rate-locks. Moreover, while much of the application process can be done electronically, it is not yet clear how many mortgage bankers are able to do so without any in-person contact. Purchase activity will undoubtedly increase amid lower rates over the medium-term, but the near-term impact is unclear as the home selling and buying process still involves significant in-person interaction. The MBA Mortgage Applications Index FELL by 8.4% during the week ended March 13 to 1073.6, sharply above its 13 week average of 685.1 and 175.3% ABOVE its year-ago level. The Purchase Index FELL by 0.9% to 278.1, slightly above its 13 week average of 276.3 and 10.6% ABOVE its year-ago level. The Refinance Index FELL by 10.4% to 5,751. With this decline, refinancing activity is sharply above its 13 week average of 3,074 and 401.5% ABOVE its year-ago level. Contract Mortgage Rates ROSE with the 30-year fixed rate increasing by 27 bps to 3.74% and the 15-year fixed rate increasing by 20 bps to 3.10%.