Mortgage applications jumped 16.7% after a 4.2% drop last week, according to the Mortgage Bankers Association.
The jump underlines the seasonality behind last week’s decrease in mortgage rates, as well as the expectation of additional fiscal stimulus from the incoming administration, per MBA Associate Vice President of Economic and Industry Forecasting Joel Kan.
“Booming refinance activity in the first full week of 2021 caused mortgage applications to surge to their highest level since March 2020, despite most mortgage rates in the survey rising last week,” Kan said.
The 30-year fixed mortgage rate climbed two basis points to 2.88%, but the 15-year fixed rate fell to 2.39% — a survey low. The refinance index increased 20% from the previous week and was 93% higher than the same week one year ago.
“Even with the rise in mortgage rates, refinancing did not slow to begin the year, with the index hitting its highest level since last March,” said Kan. “Both conventional and government refinance applications increased, with applications for government loans having their strongest week since June 2012.”
The seasonally adjusted purchase index increased 8% after a 0.8% decrease last week.
The FHA share of total applications decreased to 9.6% from 10.1% the week prior. The VA share of total applications increased to 15.8% from 13.6% the week prior.
“This is a positive sign of more lower-income and first-time buyers returning to the market,” Kan said.
Here is a more detailed breakdown of this week’s mortgage application data:
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 2.88% from 2.86%
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) increased to 3.17% from 3.08%
- The average contract interest rate for 30-year fixed-rate mortgages increased to 2.93% from 2.90%
- The average contract interest rate for 15-year fixed-rate mortgages decreased to a survey-low 2.39% from 2.40%
- The average contract interest rate for 5/1 ARMs increased to 2.66% from 2.63%