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Refinancing Activity
Soars Due to
Rate Declines
Amid growing concerns about housing to multiples of the purchasing index over the
affordability, the latest data from the Mortgage next few years. The current period shows this
Bankers Association’s (MBA) weekly mortgage divergence, as higher levels than the current level
applications survey show a surge in home of refinancing had not been seen since late 2016.
refinancing, a week-to-week increase of 39% The data also show that purchase applications
on a seasonally adjusted basis. The increase is are almost 10% higher than they were a year
contemporaneous with the fourth consecutive ago, that refinance applications are 58% higher
week of mortgage rates’ declining. Despite on a year-over-year basis, and that, combined,
the widespread decrease in mortgage rates, both purchase and refi applications are almost
changes in purchasing activity (i.e., purchases 30% higher than they were a year ago. Despite
on new or existing homes) were not as sensitive the tight lending environment of 2019, as
to the drop as were applications to refinance. anticipated by banks’ senior loan officers in the
The last 20 years’ data of the MBA’s Purchasing Federal Reserve’s Senior Loan Officer Opinion
and Refinancing Indexes show that refinancing Survey, the data show a rise in applications on
activity of homes is often volatile. In early 2000, a year-to-date and year-over-year basis, which
refi and purchase applications were almost may partially offset tighter lending standards.
the same but, the refinancing index climbed The mortgage applications for purchase index
is usually a leading indicator
for forthcoming home
sales, but the latter may be
conflated by other factors,
such as all-cash sales. The
prior few months’ data lean
less to such a conclusion,
as the upward trend of the
purchase index in January
2019 was subsequently
followed up by increases
in new and existing home
sales in February.
NAHB APR 2019
14 MAY 2019 | GREATER SAN ANTONIO BUILDERS ASSOCIATION
