MBA: Mortgage applications jump more than 20%

Increase 23.5% from the previous week

Mortgage applications reversed course, rising 23.5% for the week ending Jan 4, 2019, according to the newest data from the Mortgage Bankers Association's weekly Mortgage Applications Survey.

Notably, this week’s reading includes adjustments to account for the New Year’s holiday.

“Mortgage rates fell across the board last week and applications rebounded sharply, after what was a slower than usual holiday period,” MBA Associate Vice President of Economic and Industry Forecasting Joel Kan said. “The 30-year fixed-rate mortgage declined 10 basis points to 4.74%, the lowest since April 2018, and other loan types saw rate decreases of between 9 and 20 basis points.”

On an unadjusted basis, the Market Composite index increased 23.5% from the previous week.

“This drop in rates spurred a flurry of refinance activity – particularly for borrowers with larger loans – and pushed the average loan size on refinance applications to the highest in the survey,” Kan continued. “The surge in refinance activity also brought the refinance index to its highest level since last July.”

“Purchase applications had their strongest week in a month, finishing over 4% higher than a year ago, as both conventional and government purchase activity bounced back with solid gains after a sluggish holiday season,” Kan concluded.

The Refinance Index skyrocketed 35% from the prior week and the unadjusted Purchase Index climbed 59% from a week ago but was only 4% higher than the same week in 2018. The seasonally adjusted Purchase Index also significantly increased, rising 17% from the week before.

The refinance share of mortgage activity rose to 45.8% of total applications, increasing from 42.7% the previous week. This is the highest reading since February 2018.

The adjustable-rate mortgage share of activity reached 8.4% of total applications, and the average loan size for refinance applications reached a survey high, moving forward to $339,800.

The Federal Housing Administration share of mortgage apps rose from last week’s 10% to 10.3%.

The Veterans Affairs' share of applications also increased, rising from 11% the previous week to 11.6% this week. Notably, this is the highest level since March 2017.

The Department of Agriculture share of total applications held steady at 0.6% from the previous week.

The MBA reported that mortgage interest rates for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.74% from 4.84% the previous week, the lowest level since April 2018.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) decreased from last week’s 4.72% to 4.52% this week.  This percentage is the lowest level since February 2018.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA fell from 4.86% last week to 4.70% this week. This is the lowest level since April 2018.

The average contract interest rate for 15-year fixed-rate mortgages fell, decreasing from 4.25% last week to 4.16% this week. Once again, this is the lowest level since April 2018.

Lastly, the average contract interest rate for 5/1 ARMs decreased to its lowest level since August 2018, falling from last week’s 4.16% to 4.05% this week.  

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