Mortgage apps post sharp rebound as rates fall

The refinance share of mortgage activity increased to its highest level since February

Mortgage apps post sharp rebound as rates fall

Mortgage applications increased during the week ending Jan. 4 as rates fell across the board, according to the Weekly Mortgage Applications Survey released by the Mortgage Bankers Association (MBA).

The Market Composite Index, a measure of mortgage loan application volume, increased 23.5% on a seasonally adjusted basis and increased 68% on an unadjusted basis. The results include an adjustment for the New Year's Day holiday.

The Refinance Index increased 35%. The Purchase Index increased 17% on a seasonally adjusted basis and rose 59% on an unadjusted basis. The unadjusted Purchase Index was 4% higher than the same week one year ago.

"Mortgage rates fell across the board last week and applications rebounded sharply, after what was a slower than usual holiday period. The 30-year fixed-rate mortgage declined 10 basis points to 4.74%, the lowest since April 2018, and other loan types saw rate decreases of between 9 and 20 basis points," said Joel Kan, MBA's associate vice president of economic and industry forecasting. "This drop in rates spurred a flurry of refinance activity - particularly for borrowers with larger loans - and pushed the average loan size on refinance applications to the highest in the survey (at $339,800). The surge in refinance activity also brought the refinance index to its highest level since last July."

Applications for refinances accounted for 45.8% of overall activity, increasing to its highest level since February from 42.7%. The adjustable-rate mortgage share of activity increased to 8.4% of total applications.

FHA applications made up 10.3% of total applications, up from 10%. The VA share of total applications increased to its highest level since March 2017, 11.6%, from 11%. Applications for USDA mortgages had a 0.6% share, unchanged from the previous period.

RELATED ARTICLES