Where Is the Mortgage Market Headed Next?

After March's wild ride for the mortgage market, the instability is not expected to recede anytime soon. Although mortgage rates plummeted again after unexpectedly rising in response to an overflow of refinancing activity, experts still say that buying activity will be low as more Americans lose their jobs. The rate drop did spark an increase in loan application volume last week, but harder times lie ahead: Economists do not think we've hit the stock market's lowest point yet. It will get worse before it gets better.

The Mortgage Bankers Association’s latest Weekly Application Survey shows a 15.3% seasonally adjusted rise in loan application volume from the previous week. The Refinance index increased 25.5% from the previous week and was 168% higher than it was the same week one year ago. The Purchase Index decreased 10.8% from one week earlier. The MBA notes that buyer and seller traffic are likely to slow down this spring due to restrictions in in-person activity imposed at the state level in response to the coronavirus outbreak, which had been earlier seen to cause major disruptions to economic activity and financial markets across the nation and the world.

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