Mortgage applications rise 4.6%

Purchase applications hit 20 straight weeks of year-over-year gains

After faltering 4.8% the week prior, mortgage applications almost completely rebounded last week, gaining 4.6%, according to a report from the Mortgage Bankers Association.

The refinance index also jumped 8% — hitting its highest level since mid-August. Refinances continued to hover around two-thirds share of mortgage activity as they increased to 65.4% of total applications from 63.3% the week prior.

According to Joel Kan, MBA’s associate vice president of economic and industry forecasting, mortgage rates declined across the board last week – with most falling to record lows – and borrowers responded as refis remained 50% higher than the same week one year ago when rates hovered near 3.64%.

Purchase applications gained 21% from a year ago — hitting a milestone of 20 straight weeks of year-over-year gains. Purchase applications were also 2% higher than the week prior.

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“Continuing the trend seen in recent months, the purchase market is growing at a strong clip,” Kan said. “The average loan size increased again to a new record at $371,500, as activity in the higher loan size categories continues to lead growth.”

According to Kan, signs are beginning to show that demand is waning at the entry-level portion of the market, most likely caused by supply and affordability hurdles. The adverse economic impact of the pandemic is also having an effect.

“As a result, the lower price tiers are seeing slower growth, which is contributing to the rising trend in average loan balances,” Kan said.

The adjustable-rate mortgage (ARM) share of activity remained unchanged at 2.2% of total applications.

Here is a more detailed breakdown of this week’s mortgage application data:

  • The FHA’s share of mortgage apps fell to 11% from 11.4%.
  • The VA share of applications rose to 12.2% from 11.9%.
  • The USDA share of total applications remained unchanged from 0.5% the week before.
  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) fell to 3.01% from 3.05%.
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) fell to 3.31% from 3.33%.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA fell to 3.12% from 3.15%.
  • The average contract interest rate for 15-year fixed-rate mortgages fell to 2.59% from 2.65%.
  • The average contract interest rate for 5/1 ARMs fell to 2.8% from 2.95%.

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