Mortgage applications rise as refinance volume continues to grow
Mortgage applications increased 3.8% from one week earlier as a drop in most loan interest rates brought on an increase in refinance activity, according to the Mortgage Bankers Association.
The MBA's Weekly Mortgage Applications Survey for the week ending Oct. 30 found that the refinance index increased 6% from the previous week and was 88% higher than the same week one year ago. The refinance share of mortgage activity increased to 68.7% of total applications from 66.7% the previous week.
"Mortgage rates continue to hover at record lows this fall. The 30-year fixed mortgage rate remained essentially unchanged at 3.01% last week, but rates for 15-year fixed-rate loans, FHA loans and jumbo loans all fell to new MBA survey lows," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release. "The drop in rates spurred an uptick in demand for refinances. Activity increased over 6%, with borrowers notably seeking conventional and government loans."
The seasonally adjusted purchase index decreased 1% from one week earlier, while the unadjusted purchase index decreased 3% compared with the previous week.
"After a solid stretch of purchase applications growth, activity decreased for the fifth time in six weeks, but was still over 25% higher than a year ago, and has increased year-over-year for six straight months. 2020 continues to overall be a strong year for the housing market," Kan said.
Adjustable-rate mortgage activity remained unchanged at 2.1% of total applications, while the share of Federal Housing Administration-insured loan applications decreased to 11.1% from 11.7% the week prior.
The share of applications for Veterans Affairs-guaranteed loans increased to 12.2% from 11.4% and the U.S. Department of Agriculture/Rural Development share remained unchanged from 0.5% the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased 1 basis point to 3.01%. For jumbo 30-year FRMs (balances greater than $510,400), the average contract rate decreased 10 basis points to 3.18%.
The average contract interest rate for FHA-insured 30-year FRMs decreased 6 basis points to 3.08%. Meanwhile for 15-year FRMs, the average contract interest rate decreased 5 basis points to 2.55%. The average contract interest rate for 5/1 ARMs decreased to 2.67% from 3.05%.