Home loan applications trended upward last week, buoyed by homeowners looking to refinance.
The Mortgage Bankers Association’s weekly index measuring home loan application volume saw a 7.3 percent increase last week, for the period ending April 10.
Refinancings accounted for 76.2 percent of mortgage activity last week, according to MBA. That marks a 10 percent increase from last week, and a 192 percent jump year over year.
Still, that’s down 26 percent compared to four weeks ago, when the Federal Reserve’s first emergency rate cut had mortgage lenders anticipating a bumper year and a boom in refinance applications. The overall number of applications is down 28 percent compared to four weeks ago.
MBA’s purchase index slid almost 1 percent, marking the fifth consecutive weekly decline in home purchase applications. In the previous period, the week ending April 3, purchase application activity fell to its lowest level since 2015.
Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, said the purchase index was down 35 percent compared to the first week of March.
But he pointed to the 30-year fixed mortgage rate declining to 3.45 percent as a sign that the mortgage-backed securities market is “stabilizing.” That marks a 4 basis point drop from the previous week’s contract rate, which is down nearly 99 basis points year over year.
When the Fed announced its second rate cut in mid-March, it also announced it would purchase at least $200 billion of mortgage-backed securities, which experts said would allow banks to keep lending and set the stage for recovery.
In a forecast released in early April, MBA predicted that refinance activity would account for roughly half of originations through the third quarter of 2020.
Write to Erin Hudson at ekh@therealdeal.com