Mortgage applications jump as purchase demand stays robust
Mortgage applications increased 2.9% from one week earlier, rising for the first time in nearly a month with home-buying demand remaining unusually strong as summer ends, according to the Mortgage Bankers Association.
"Purchase applications were 40% higher than the same week last year, but the increase is skewed higher by being compared to Labor Day 2019," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release. "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."
"Highlighting the strong overall demand for buying a home, conventional, VA and FHA purchase applications all increased last week," Kan added.
The MBA's Weekly Mortgage Applications Survey for the week ending Sept. 4, 2020 found that the refinance index increased 3% from the previous week and was 60% higher than the same week last year, which included the Labor Day holiday.
The refinance share of mortgage activity increased to 63.1% of total applications from 62.5% the previous week.
"Mortgage rates declined last week, with a noteworthy 5-basis-point decrease in the 15-year fixed rate to a new record low of 2.62%," Kan said. "The drop in rates led to a rebound in refinancing activity, driven mainly by borrowers applying for conventional loans."
The seasonally adjusted purchase index increased 3% from one week earlier, while the unadjusted purchase index increased 0.2% compared with the previous week.
Adjustable-rate mortgage activity decreased to 2.2% from 2.6%, while the share of Federal Housing Administration-insured loan applications remained unchanged remained unchanged from 10.2% the week prior.
The share of applications for Veterans Affairs-guaranteed loans decreased to 11.2% from 11.4% and the U.S. Department of Agriculture/Rural Development share 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) decreased 1 basis point to 3.07%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400), the average contract rate decreased 1 basis point to 3.4%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased 3 basis points to 3.16%. For 15-year fixed-rate mortgages, the average decreased 5 basis points to 2.62%. The average contract interest rate for 5/1 ARMs decreased to 2.99% from 3.08%.