MBA Senior Vice President and Chief Economist Mike Fratantoni observed: “Last week appears to have been the calm before the storm. Weaker readings on economic growth caused a slight drop in mortgage rates, bringing them back to their level two weeks ago, but applications overall moved 1.5 percent higher. Refinance applications for conventional loans dropped a bit, but FHA refinances increased more than 22 percent. Purchase volume remained strong, supported both by low rates and the increased pace of construction over the past few months. With housing supply at low levels, new inventory is a positive development for prospective homebuyers.”
Among the federal programs, the FHA share of total applications increased to 10.5 percent from 9.5 percent the week prior, while the VA share of total applications decreased to 11.8 percent from 12.1 percent and the week USDA share of total applications increased to 0.5 percent from 0.4 percent.
Fratantoni added, “As fears regarding the coronavirus have increased, Treasury yields have dropped to record lows this week amid the ensuing financial market volatility. Next week’s results will show the impact this drop in Treasuries had on mortgage activity.”