A seasonally adjusted index measuring purchase applications jumped 8% last week, according to a report from the Mortgage Bankers Association. While the week prior saw the seasonally adjusted index rising to its highest level since January, this week the MBA reported the highest level in over 11 years.
Just as mortgage applications increased, applications for refinancings also rose 10% from the week prior, signaling the second gain for refinancings in two months.
“The housing market continues to experience the release of unrealized pent-up demand from earlier this spring, as well as a gradual improvement in consumer confidence,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.
Applications for purchase mortgages gained for the ninth consecutive week as housing demand rose 25% above pre-pandemic levels, according to a report by Redfin.
While refinancings are 106% higher than the same week a year ago, Kan attributes the 10% surge from the previous week to mortgage rates dropping to another record low, according to an MBA survey.
“Refinancing continues to support households’ finances, as homeowners who refinance are able to gain savings on their monthly mortgage payments in a still-uncertain period of the economic recovery,” Kan said.
The refinance share of mortgage activity also gained for the second week to 63.2% of total applications from 61.3% the week prior. However, the adjustable-rate mortgage share of activity fell to 2.8% of total applications, the report said.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) fell to the lowest level in survey history from 3.38% to 3.3%, according to the report.
Here is a more detailed breakdown of this week’s mortgage application data:
- The FHA’s share of mortgage apps fell to 11% from 11.5%.
- The VA share of applications fell to 11.5% from 12.3%.
- The USDA share of total applications increased to 0.8% from 0.7%.
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) fell to 3.67% from 3.7%.
- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA fell to 3.33% from 3.38%.
- The average contract interest rate for 15-year fixed-rate mortgages fell to 2.8% from 2.83%.
- The average contract interest rate for 5/1 ARMs increased from 3.02% to 3.07%.