Despite U.S. economic volatility, mortgage applications pushed forward for the week ending Jan. 11, 2019, according to the newest data from the Mortgage Bankers Association's weekly Mortgage Applications Survey.
MBA Senior Vice President and Chief Economist Mike Fratantoni said mortgage applications rose to their strongest level in years last week, with purchase applications rising to the highest since 2010, and refinance applications up to their highest level since last spring.
“Uncertainty regarding the government shutdown, slowing global growth, Brexit, a more patient Fed, and a volatile stock market continued to keep rates from increasing,” Fratantoni continued. “The spring home-buying season is almost upon us, and if rates stay lower, inventory continues to grow, and the job market maintains its strength, we do expect to see a solid spring market. The 11% gain in purchase volume compared to last year is a promising sign.”
On an unadjusted basis, the Market Composite index increased 13.5% from the previous week.
“Borrowers with larger loans tend to be more responsive to a given drop in mortgage rates, and we are seeing that so far in 2019,” Fratantoni said. “Furthermore, borrowers with jumbo loans are also more apt to take adjustable-rate mortgages as opposed to fixed-rate loans. Thus, it is not surprising to see the ARM share at its highest level since 2014. These borrowers may also feel more confident taking an adjustable-rate mortgage given the expectation of a more patient Fed.”
The Refinance Index increased 19% from the prior week and the unadjusted Purchase Index climbed 43% from a week ago and is 11% higher than the same week in 2018. The seasonally adjusted Purchase Index also increased, moving forward 9% from the week before.
The refinance share of mortgage activity rose to 46.8% of total applications, increasing from 45.8% the previous week. This is the highest reading since January 2018.
The adjustable-rate mortgage share of activity reached 9.2% of total applications, reaching its highest level since January 2018.
The average loan size for refinance applications also reached a survey high, increasing to $353,100.
The Federal Housing Administration's share of mortgage apps rose from last week’s 10.3% to 10.9%.
However, the Veterans Affairs' share of applications decreased, falling from 11.6% the previous week to 10.4% this week.
The Department of Agriculture's share of total applications fell from 0.6% the previous week to 0.5% this week.
The MBA reported that mortgage interest rates for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) held steady from the previous week, coming in at 4.74% once again.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) slightly increased from last week’s 4.52% to 4.53% this week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA moderately rose from 4.70% last week to 4.76% this week.
The average contract interest rate for 15-year fixed-rate mortgages slid to its lowest level since April 2018, declining from 4.16% last week to 4.13% this week.
Lastly, the average contract interest rate for 5/1 ARMs moved forward to 4.08%, increasing from to 4.05% last week.