MBA Chart of the Week: Purchase Applications by Loan Size (Year Over Year Changes)

Mortgage applications for home purchase loans are now increasing across all loan sizes, based on loan count on a year over year basis, according to data from MBA’s March 2016 Monthly Profile of State and National Mortgage Activity (https://www.mba.org/store/products/market-and-research-data/monthly-profile-of-state-and-national-mortgage-activity).  

Loan sizes of $300,000 and higher continue to grow at a faster pace, and while the lower loan size buckets still lag, their growth rates are a significant improvement compared to the past two years, and an important indicator that first time buyers may be returning to the market in greater numbers. In both March 2014 and 2015, applications for purchase loans of $150,000 and less were contracting compared to previous years.  

Two-thirds of all purchase applications are less than $300,000; these are typically loans made to entry level and first time home buyers. Due to various factors including tight inventories of lower priced homes, access to credit, below normal rates of household formation and the increased propensity to rent, this segment of the market has been slow to recover.  

With the extended period of job market growth and declining unemployment, there is evidence that household formation has picked up speed, and we expect this trend will continue over the next decade, boosting demand for housing of all types, but particularly at the entry level.  

To view the Chart of the Week, click https://www.mba.org/news-research-and-resources/forecasts-data-and-reports/forecasts-and-commentary/chart-of-the-week.  

(Lynn Fisher is vice president of research and economics with the Mortgage Bankers Association; she can be reached at lfisher@mba.org. Joel Kan associate vice president of economic forecasting with MBA; he can be reached at jkan@mba.org. Anh Doan is senior financial analyst with MBA. She can be reached at adoan@mortgagebankers.org.)