Rock-bottom mortgage rates enticed Tri-Cities homeowners to flock toward refinancing during the last three quarter of 2019, according to ATTOM Data Solution’s Q4 Mortgage Origination Report.  During Q4, refi loan originations almost equaled the number of purchase originations.

And all of that was B.C. (Before Coronavirus). By late March it was a whole new ball game and it was beginning to look like housing and home financing were turning upside down, at least in the short-term.

“The fourth quarter was a banner period for residential mortgages across the United States, as declining interest rates and a strong economy helped spur more than 2 million borrowers to sign on for new or refinanced loans,” said Todd Teta, chief product officer at ATTOM Data Solutions. “Refinancing largely drove the trend, with more than twice as many homeowners trading in higher-interest mortgages for cheaper ones than in the same period of 2018. These trends could all change when the economic fallout from the Coronavirus outbreak hits. But the last few months of 2019 saw a burst of lending activity not seen in the U.S. housing market for several years.”

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“Could all change” was rapidly becoming changing according to local lenders. Deals that we already in the pipeline will save March and the Q1 picture. But things were beginning to change in the latter weeks of the month.

David Hamilton, president of the Tri-Cities Mortgage Bankers’ Association, said he watched applications drop off the face of the earth with much of his blue-collar clientele. He added that many of the pre-approved clients were beginning to back off. “They’re scared to death,” he said.

Steve Reed at Benchmark said his firm saw good volumes when everyone rushed into refinance. He said he wasn’t seeing a lot of people getting pre-approved on the purchase side. There were other similar responses. Although the sampling was random, a March-April decline was in the range of 30% to 40%

Nationwide mortgage application volume fell 29% in the week ending March 20, according to the Mortgage Bankers Association. It was the largest drop since 2009. At the same time, the home-purchase index fell 15% to its lowest level since August 2019 and dropped 11% on the year. It was the first year-over-year decline in more than three months.

And those refi applications that were so strong during the last three quarters of 2019 dropped 34% from the previous week. But even with that decline, they were up 195% from a year ago.

“Potential homebuyers might continue to hold off on buying until there is a slowdown in the spread of the coronavirus and more clarity on the economic outlook,” Joel Kan, MBA’s associate vice president of Economic and Industry Forecasting, said in a statement.

During the final week of March, rates began stabilizing after the Federal Reserve stepped in. On March 26, the 30-year fixed-rate mortgage dropped to 3.5%, 0.14% lower than it was at the beginning of the year.

Categories: REAL ESTATE