The refinance index continued its upward climb, gaining 9% last week and jumping 86% higher than the same week one year ago. Refinances also reached a nearly two thirds share of mortgage activity last week, increasing to 64.3% of total applications from 62.8% the week prior.
According to Mike Fratantoni, chief economist and vice president of research and technology at MBA, 2003 was the last time refinance activity was as high as the $1.75 trillion the MBA is forecasting for 2020.
On Sept. 9, Joel Kan, MBA’s associate vice president of economic and industry forecasting, said the recent rebound in refinance activity was driven mainly by borrowers applying for conventional loans. However, last week Kan noted that while conventional and government refinances gained steam, FHA refis experienced a particular uptick.
On an unadjusted basis, purchase applications rose 13% compared with the previous week and were 25% higher than the same week one year ago – marking the 18th straight week of year-over-year gains.
The demand for higher-balance loans pushed the average purchase loan size to another record high, signaling that consumers’ strong interest in home-buying this summer has now carried over to the fall, Kan said.
The adjustable-rate mortgage (ARM) share of activity fell slightly to 2.2% from 2.3% of total applications.
Here is a more detailed breakdown of this week’s mortgage application data:
- The FHA’s share of mortgage apps rose to 10.1% from 9.7%.
- The VA share of applications fell to 12% from 12.3%.
- The USDA share of total applications rose to 0.6% from 0.5%.
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) rose to 3.1% from 3.07%.
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) fell to 3.35% from 3.41%.
- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA rose to 3.23% from 3.16%.
- The average contract interest rate for 15-year fixed-rate mortgages rose to 2.64% from 2.61%.
- The average contract interest rate for 5/1 ARMs fell to 3.19% from 3.2%.