Mortgage Demand Hits 2010 High, Despite New Lending Rules

While the jury is still out the true impact of the Consumer Financial Protection Bureau’s TRID mortgage rules, demand for mortgage applications is at one of its highest levels since 2010, according to the Mortgage Bankers Association (MBA).

Mortgage applications grew 21.3% from one week earlier, according to the MBA’s Weekly Mortgage Applications Survey for the week ending January 8, 2016.

On a seasonally adjusted basis, the MBA’s Market Composite Index, a measure of mortgage loan application volume, increased 18% from one week earlier—reaching its second-highest level since May 2010, and second only to the week prior to the implementation of the CFPB’s Know Before You Owe (also known as TRID) mortgage rules, said Lynn Fisher, MBA’s vice president of research and economics.

“Bolstered by strong fourth quarter growth in jobs and continuing low rates, the results are similar to levels we saw in early December, suggesting that the purchase market’s strong finish to 2015 may be continuing,” Fisher said in a prepared statement.

While refinances also increased on a “holiday-adjusted basis,” Fisher noted that refinance activity was down 38% compared to a year ago, when rates dove below 4%.

The refinance share of mortgage activity grew to 55.8% of total applications, up slightly from 55.4% during the previous week. Additionally, the Refinance Index increased 24% from last week.

Of total applications, the Federal Housing Administration proportion decreased modestly to 14.4% from 14.6% during the prior week. Meanwhile, the VA share of weekly applications also dropped from 12.9% to 12.2%, while USDA applications rose from 0.6% to 0.8%.

For 30-year fixed-rate mortgages with conforming loan balances of $417,00 or less, the average contract interest rate decreased during the week to 4.12%, with points decreasing to 0.38 from 0.42 for 80% loan-to-value (LTV) loans.

On FHA-backed loans, the average contract interest rate dropped to 3.90%, down from 3.95% in the previous week, with points decreasing to 0.34 from 0.41 for 80% LTV loans.

Written by Jason Oliva

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