by Calculated Risk on 3/25/2020 07:00:00 AM

The MBA noted that purchase applications were off 35% in New York not seasonally adjusted (following a 24% decline the previous week), and off 23% in California.

From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey

Mortgage applications decreased 29.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 20, 2020.

... The Refinance Index decreased 34 percent from the previous week and was 195 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 15 percent from one week earlier. The unadjusted Purchase Index decreased 14 percent compared with the previous week and was 11 percent lower than the same week one year ago.
...
“The 30-year fixed mortgage rate reached its highest level since mid-January last week, even as Treasury yields remained at relatively low levels. Several factors pushed rates higher, including increased secondary market volatility, lenders grappling with capacity issues and backlogs in their pipelines, and remote work staffing challenges,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “With these higher rates, refinance activity fell 34 percent, and both the conventional and government indices dropped to their lowest level in a month. Looking ahead, this week’s additional actions taken by the Federal Reserve to restore liquidity and stabilize the mortgage-backed securities market could put downward pressure on mortgage rates, allowing more homeowners the opportunity to refinance.”

Added Kan, “Home purchase applications were notably impacted by rising rates and the widespread economic disruption and uncertainty over household employment and incomes. Last week’s purchase index fell 15 percent to its lowest level since August 2019. Compared to a year ago, purchase applications were down 11 percent – the first year-over-year decline in over three months. Potential homebuyers might continue to hold off on buying until there is a slowdown in the spread of the coronavirus and more clarity on the economic outlook.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 3.82 percent from 3.74 percent, with points decreasing to 0.35 from 0.37 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.


The first graph shows the refinance index since 1990.

With record lower rates, we saw a huge increase in refinance activity in the survey over the last two weeks.   Now, with higher rates last week - due to issues in the MBS market - refinance activity declined sharply.  Note the Fed has stepped up buying of MBS this week.

The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is DOWN 11% year-over-year.

It appears purchase activity is falling sharply.