Mortgage rates last week dropped to the lowest level ever in the Mortgage Bankers Association’s weekly survey, causing a surge in applications to refinance a home.
Total mortgage application volume increased 7.3 percent last week from the previous week, according to the seasonally adjusted index published by the MBA.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $510,400 less fell to 3.45 percent from 3.49 percent. Points increased to 0.29 from 0.28 for 80 percent loan-to-value ratio loans.
“The decline in rates – despite Treasury yields rising – is a sign that the mortgage-backed securities market is stabilizing and lenders are successfully working through their lending pipelines," Joel Kan, an MBA economist, said in a statement.
Kan said the record-low interest rates spurred a 10 percent increase last week in refinance activity. That's 192 percent higher than the one-year ago period.
Despite the low rates, mortgage applications to purchase a home fell for the fifth straight week, down 2 percent from the previous week and 35 percent from a year ago as the economic downturn and social distancing turned off potential buyers.
Purchase applications in the states hardest hit by the virus outbreak, like New York, California and Washington, are almost half that of what they were a year ago.