As economic uncertainty about the coronavirus drives down interest rates, house hunters are applying for mortgages at a level not seen in more than a decade.
For the week ending March 6, mortgage loan applications rose 55.4% as compared to a week earlier, reaching their highest number since April 2009, according to the Mortgage Bankers Association’s weekly survey.
Homeowners also flocked to take advantage of lower interest rates. Refinancing applications jumped 79% week over week, the biggest weekly jump since November, 2008. The volume of refinance applications was also the highest in nearly 11 years.
“Market uncertainty around the coronavirus led to a considerable drop in U.S. Treasury rates last week, causing the 30-year fixed rate to fall and match its December 2012 survey low of 3.47%,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement about the survey’s results.
Low rates can significantly shave monthly mortgage payments, and the MBA has now significantly ratcheted up its projections for how many home owners will successfully refinance their loans this year. It expects the number of refinanced loans to total $1.2 trillion, 37% more than 2019 and the largest volume in eight years.
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“As lenders handle the wave in applications and manage capacity, mortgage rates will likely stabilize but remain low for now,” Kan said. “This in turn will support borrowers looking to refinance or purchase a home this spring.”
Worries about COVID-19, which has sickened more than 1,000 people in the U.S., and tens of thousands worldwide, are rattling global markets. Economic angst led Federal Reserve officials to take the rare step of cutting interest rates last week, and anxious investors are flocking to bonds, resulting in a drop of the 10-year Treasury yield, the benchmark for the setting of interest rates on mortgages and car loans.