Mortgage application volume bounced back from the usual holiday lull, increasing an impressive 49% for the week ended Jan. 9, compared to the previous week, according to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.
On an unadjusted basis, volume was up a whopping 119%.
Applications for refinances increased 66%, on an adjusted basis, driven mainly by low mortgage rates that continued to drop through the holidays. Applications for purchases were up 24% compared to the previous week.
It was the biggest spike in application volume since November 2008.
On an unadjusted basis, applications for purchases were up 83% compared with the previous week and were 2% higher than the same week one year ago.
Mike Fratantoni, chief economist for the MBA, attributed the increase in volume to improved consumer attitudes toward homeownership fanned by recent news that the job market is strengthening, credit is loosening somewhat and that the Federal Housing Administration (FHA) will soon be cutting its mortgage insurance premiums.
In addition, ‘tumbling oil prices have led to further declines in longer-term interest rates,’ thus spurring many homeowners to refinance, Fratantoni says in a release.
‘Mortgage rates reached their lowest level since May of 2013, and refinance application volume soared, more than doubling on an unadjusted basis, and up 66 percent after adjusting for the fact that the previous week included the New Year's holiday,’ he says, adding that ‘conventional refinance volume increased to a greater extent than government refinance volume.’
Fratantoni also points out that ‘applications for larger refinance loans increased more than four times relative to the previous week.’
‘The average conventional refinance application increased to $298,700 from $233,500 the prior week,’ he says. ‘Although there was a somewhat smaller increase for government refinance volume, Veterans Affairs (VA) refinance applications increased by 50 percent. VA loans tend to be larger than FHA and U.S. Department of Agriculture (USDA) loans and, hence, are more responsive to a given rate change.’
Fratantoni also notes that ‘FHA purchase application volume was up by 17 percent for the week on a seasonally adjusted basis.’
The refinance share of mortgage activity increased to 71% of total applications, compared to 65% the previous week.
The average rate for a 30-year fixed-rate mortgage (FRM) with conforming loan balance ($417,000 or less) was 3.89%, down from 4.01% the previous week.
The average rate for a 30-year FRM with jumbo loan balance (greater than $417,000) was 3.88%, down from 3.99% the week prior.
The average rate for a 30-year FRM backed by the FHA was 3.71%, down from 3.81%.
The average rate for a 15-year FRM was 3.16%, down from 3.24%.
The average rate for a 5/1 adjustable-rate mortgage (ARM) was 2.94%, down from 3.19%.
The ARM share of activity increased to 5.9% of total applications.
Looking at application volume by loan type, applications for mortgages backed by the FHA represented 7.5% of all applications, down from 9.3% the previous week. Applications for VA mortgages represented 9.7% of all loans, down from 10.7% the previous week. Applications for mortgages through the USDA fell to 0.8% of all applications, down from 0.9% the previous week.
The survey covers over 75% of all U.S. retail residential mortgage applications.