Refinance demand managed to bounce back just one week after reporting that was starting to dissipate.
Last week, the Mortgage Bankers Association weekly mortgage applications survey showed that the overall refinance share of mortgage activity was waning, falling to 52.4% of total applications from 53.9% the previous week.
For comparison, the reports for the last two years for the same period recorded the refinance share of activity at 61% of total applications in 2015 and at 54% in 2014, which was the lowest level since 2010 at the time.
According to the latest survey for the week ending April 1, the refinance share of mortgage activity now sits at 54.5% of total applications.
Overall, mortgage applications slightly grew 2.7% from one week earlier, with the seasonally adjusted purchase index decreasing 2% from one week earlier.
Driving the rise in mortgage applications, the refinance index increased 7% from the previous week.
The Federal Housing Administration’s share of total applications barely fell to 11.3% from 11.5% the week prior. The Veteran Affairs’ share of total applications decreased to 12.2% from 12.9% the week prior. The United States Department of Agriculture’s share of total applications slight decreased to 0.8% from 0.9% the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased from 3.94% to 3.86%.
Similarly, the average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) dipped to 3.76% from 3.82%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.73% from 3.76%.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.10% from 3.19%, while the average contract interest rate for 5/1 ARMs decreased to 2.94% from 3.07%.
Appraisal volume also surged in its latest report as buyers rushed to the market to take advantage of low interest rates, especially given recent comments from Federal Reserve Chair Janet Yellen on pending interest rate increases.
While refinance demand has steadily dwindled, it doesn’t mean that there isn’t a pool of potential. According to the recent Mortgage Monitor Report released by Black Knight Financial Services, the number of borrowers who could both likely qualify for and benefit from a refinance increased by 30%, or by 1.5 million. That makes a total of 6.7 million borrowers who could save about $3,000 a year.
“This expansion of potential candidates could very well provide a welcome and unexpected lift to the market as we move forward in 2016,” Senior Vice President Ben Graboske said.