Following a multi-week lull to end 2018, the mortgage market saw a dramatic uptick in applications, per the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending Jan. 4, 2019. Seasonally-adjusted data revealed a 23.5 percent increase in total application volume compared with the previous week.
On an unadjusted basis, which did not account for the New Year’s holiday, the Market Composite Index, which MBA uses to measure mortgage volume, increased 68 percent over the same timeframe. The Refinance Index saw a 35 percent uptick from the week prior, according to the survey results.
“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 percent, the lowest since April 2018, and other loan types saw rate decreases of between 9 and 20 basis points,” MBA Associate Vice President of Economic and Industry Forecasting Joel Kan said in a press release. “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.
“Purchase applications had their strongest week in a month, finishing over 4 percent higher than a year ago, as both conventional and government purchase activity bounced back with solid gains after a sluggish holiday season,” he added.
The Purchase Index which Kan referenced rose 59 percent on an unadjusted basis compared with 55 percent the same week the previous year. On a seasonally adjusted basis, the Purchase Index increased 17 percent during the period analyzed.
Refinances and loans insured by the Department of Veterans Affairs (VA) saw notable highs in market share in the latest survey.
The refinance share of mortgage activity increased 3.1 percent to its highest level since February 2018 at 45.8 percent of total applications, according to the release. The average loan size for refinance applications reached a survey high at $339,800.
The share of VA loans increased to its highest level since March 2017, 11.6 percent, from 11.0 percent the previous week.
The survey showed an 8.4 percent-increase in the share of market activity for adjustable-rate mortgage (ARM) applications.
The share of total applications insured by the Federal Housing Administration reached 10.3 percent, compared to 10 percent the previous week.
The U.S. Department of Agriculture’s (USDA) share of total applications remained unchanged at 0.6 percent from the week prior.
Depending on whether the shutdown continues and how other mortgage types fare going forward, FHA and USDA loan market share could drop as the USDA is unable to approve loans during the shutdown and funding reserved for mortgage programs financed through the Department of Housing and Urban Development is expected to run out in mid-February.
For 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less), the average contract interest rate decreased to its lowest level since April 2018, 4.74 percent, from 4.84 percent, with points increasing to 0.47 from 0.42 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) dropped to its lowest level since February 2018, 4.52 percent, from 4.72 percent, with points decreasing to 0.28 from 0.3 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from the week prior.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to its lowest level since April 2018, 4.7 percent, from 4.86 percent, with points decreasing to 0.47 from 0.54 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from the preceding week.
For 15-year fixed-rate mortgages, the average contract interest rate fell to its lowest level since April 2018, 4.16 percent, from 4.25 percent, with points decreasing to 0.35 from 0.6 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from the week before.
The average contract interest rate for 5/1 ARMs hit its lowest level since August 2018, 4.05 percent, dropping 11 basis points from 4.16 percent, with points decreasing to 0.32 from 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate also decreased from the previous week.