Last week’s drop in rates spurred a rebound in refi activity.
After three weeks of declines, mortgage applications rose 2.9% last week, according to a report from the Mortgage Bankers Association.
The refinance index also saw an uptick last week, gaining back the 3% it had lost the week prior and remaining 60% higher than the same week one year ago. According to Joel Kan, MBA’s associate vice president of economic and industry forecasting, last week’s drop in rates led to the rebound in refinance activity – driven mainly by borrowers applying for conventional loans.
With home purchase sentiment climbing, bidding wars and consumers borrowing up to pre-pandemic pacing, it may be no surprise that purchase applications were also on the rise last week, gaining 3% from one week earlier on a seasonally adjusted basis, and 40% higher than the same week a year ago – the 16th straight week of year-over-year gains. However, Kan said this increase is skewed higher by being compared to Labor Day 2019, when the 30-year fixed-rate mortgage climbed to 4.01%.
“Nevertheless, there continues to be resiliency in the purchase market. Applications were up almost 3% on a weekly basis and the average loan size continued to increase, hitting a survey high at $368,600,” Kan said.
According to Kan, thanks to the strong overall demand for buying a home, conventional, VA and FHA purchase applications all increased last week.
The adjustable-rate mortgage (ARM) share of activity remained unchanged at 2.6% of total applications.
Here is a more detailed breakdown of this week’s mortgage application data:
- The FHA’s share of mortgage apps remained unchanged from 10.2% the week prior.
- The VA share of applications fell to 11.2% from 11.4%.
- The USDA share of total applications remained unchanged from 0.6% the week prior.
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) fell to 3.07% from 3.08%.
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) fell to 3.4 from 3.41%.
- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA fell to 3.16% from 3.19%.
- The average contract interest rate for 15-year fixed-rate mortgages fell to 2.62% from 2.67%.
- The average contract interest rate for 5/1 ARMs fell to 2.99% from 3.08%.