Mortgage Applications Rebound in MBA Weekly Survey

Mortgage applications rebounded from a subdued holiday week, jumping by nearly 25 percent as mortgage interest rates fell to nine-month lows, the Mortgage Bankers Association reported this morning in its Weekly Applications Survey for the week ending Jan. 4.

The week’s results include an adjustment for the New Year’s Day holiday.

The Market Composite Index increased by 23.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 68 percent compared to the previous week.

The (unadjusted) Refinance Index increased by 35 percent from the previous week. The refinance share of mortgage activity increased to its highest level since February 2018, 45.8 percent of total applications, from 42.7 percent the previous week. The average loan size for refinance applications reached a survey high at $339,800.

The seasonally adjusted Purchase Index increased by 17 percent from one week earlier. The unadjusted Purchase Index increased by 59 percent compared to the previous week and was 4 percent higher than the same week one year ago.

The FHA share of total applications increased to 10.3 percent from 10.0 percent the week prior. The VA share of total applications increased to its highest level since March 2017, 11.6 percent, from 11.0 percent the week prior. The USDA share of total applications remained unchanged at 0.6 percent from the week prior.

“Purchase applications had their strongest week in a month, finishing over 4 percent higher than a year ago, as both conventional and government purchase activity bounced back with solid gains after a sluggish holiday season,” said MBA Associate Vice President of Economic and Industry Forecasts Joel Kan.

Kan noted loan types saw rate decreases of between 9 and 20 basis points. “This drop in rates spurred a flurry of refinance activity–particularly for borrowers with larger loans,” he said. “The surge in refinance activity also brought the refinance index to its highest level since last July.”

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to its lowest level since April 2018, 4.74 percent, from 4.84 percent, with points increasing to 0.47 from 0.42 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) decreased to its lowest level since February 2018, 4.52 percent, from 4.72 percent, with points decreasing to 0.28 from 0.30 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by FHA decreased to its lowest level since April 2018, 4.70 percent, from 4.86 percent, with points decreasing to 0.47 from 0.54 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to its lowest level since April 2018, 4.16 percent, from 4.25 percent, with points decreasing to 0.35 from 0.60 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 adjustable-rate mortgages decreased to its lowest level since August 2018, 4.05 percent, from 4.16 percent, with points decreasing to 0.32 from 0.34 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity increased to 8.4 percent of total applications.

The survey covers more than 75 percent of all U.S. retail and consumer direct residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.