After Holiday Break, Mortgage Applications Soar in MBA Weekly Survey

The week after the holidays usually sees a sharp jump in mortgage applications activity, and last week was no exception, according to the Mortgage Bankers Association.

MBA said mortgage applications jumped by more than 30 percent from one week earlier, according to the MBA Weekly Mortgage Applications Survey for the week ending January 10. The previous week’s results included an adjustment for the New Year’s Day holiday.

The Market Composite Index increased by 30.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 67 percent compared to the previous week. 

The unadjusted Refinance Index increased by 43 percent from the previous week and was 109 percent higher than the same week one year ago. The refinance share of mortgage activity increased to 62.9 percent of total applications from 58.9 percent the previous week.

The seasonally adjusted Purchase Index increased 16 percent from one week earlier. The unadjusted Purchase Index increased by 51 percent compared to the previous week and was 8 percent higher than the same week one year ago.

The FHA share of total applications increased to 12.7 percent from 12.2 percent the week prior. The VA share of total applications decreased to 12.1 percent from 14.1 percent the week prior. The USDA share of total applications remained unchanged at 0.5 percent from the week prior.

“The mortgage market saw a strong start to 2020,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Applications increased across the board, and the 30-year fixed mortgage rate hit its lowest level since September.

Kan said refinances increased for both conventional and government loans, as lower rates provided a larger incentive for borrowers to act. “It remains to be seen if this strong refinancing pace is sustainable, but even with the robust activity the last two weeks, the level is still below what occurred last fall,” he said. 

Kan added homebuyers were “active” the first week of the year. “Purchase activity was 8 percent higher than a year ago, and the purchase index increased to its highest level since October 2009,” he said. “Low rates and the solid job market continue to encourage prospective buyers to enter the market.”

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to the lowest level since September, 3.87 percent, from 3.91 percent, with points decreasing to 0.32 from 0.34 (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 $510,400) decreased to the lowest level since November 2016, 3.83 percent, from 3.88 percent, with points increasing to 0.24 from 0.17 (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 the lowest level since October, 3.78 percent, from 3.85 percent, with points increasing to 0.30 from 0.23 (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 the lowest level since September, 3.30 percent, from 3.35 percent, with points decreasing to 0.27 from 0.29 (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 increased to 3.35 percent from 3.19 percent, with points decreasing to 0.11 from 0.18 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity increased to 4.5 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.