As of yesterday, it looked like mortgage rates would be more interested in staying in a narrow, sideways range for the holiday-shortened Spring Break/Good Friday trading week. However, financial markets gave us a reminder about how much reality can differ from apparently probable outcomes. Fortunately, the surprises work in the favor of the mortgage market today as rates are as low a they have been in 2 weeks.
Bonds (which underlie rates) drew motivation from a combination of factors yesterday. These included compulsory trades that had to be made by the end of the month, automatic trades made in response to certain lines in the sand, and safe-haven trades resulting from the massive losses in the stock market. The net effect for the average mortgage borrower is a noticeable improvement in upfront costs at the very least. Bond yields bounced lower yesterday, finally cracking the previously impenetrable 2.8% barrier. While the rally is "just one day" in a short trading week, it progressed throughout the day, which is encouraging.
Applications for both refinancing and home purchases gained ground during the week ended March 23. The result was the largest week-over-week gains for overall loan volume since mid-January. The Mortgage Bankers Association's (MBA's) Market Composite Index a measure of application volume, jumped 4.8 percent on a seasonally adjusted basis compared to the week ended March 16. On an unadjusted basis the index was up 5 percent.
The Refinancing Index posted its largest positive change since the first week of 2018, rising 7.0 percent compared to the previous week. The refinance share of applications for the week rose to 39.4 percent compared to 38.4 percent a week earlier, reversing a slide that began in early February.