Mortgage applications continued to soar last week on the back of the lowest rates in almost a year, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.
After application volume
The Refinance Index spiked 58% from the previous week and 70% on a year-over-year basis, while the Purchase Index rose 3% on a seasonally adjusted basis and 12% on an unadjusted basis.
"Mortgage rates last week dropped to their lowest level since last October, with the 30-year fixed rate declining to 6.39 percent," said Mike Fratantoni, MBA's senior vice president and chief economist, in a press release Wednesday. "Homeowners responded swiftly, with refinance application volume jumping almost 60 percent compared to the prior week."
Nearly 60% of applications were for refinances, up from 48.8% the previous week. Homeowners with larger loans jumped at the opportunity, as the average loan size on refinances reached its highest level in the 35 years MBA has been conducting this survey, Fratantoni said.
Adjustable-rate mortgages also increased their share of activity from 9.2% to 12.9% this week.
"Even as 30-year fixed rates reached their lowest level in almost a year, more borrowers, and particularly more refinance borrowers, opted for adjustable-rate loans, with the ARM share reaching its highest level since 2008," Fratantoni said.
Current ARMs have rates about 75 basis points lower than 30-year fixed rate loans. They also typically are hybrids that start with a 5-10 year fixed rate, which reduces their risk of payment shock relative to pre-2008 predecessors that contributed to the Great Financial Crisis.
Loans backed by the Federal Housing Administration and U.S. Department of Agriculture lost 2.2 and 0.1 percentage points of their share of total applications, respectively, while Department of Veterans Affairs-guaranteed loans increased their share to 15.8% from 15.3% the week prior.
Four of the five types of mortgages the MBA tracks saw interest rates fall last week compared with the week prior, including:
- 30-year fixed-rate mortgages with conforming loan balances, 6.39% from 6.49%;
- 30-year fixed-rate mortgages the FHA backs, 6.14% from 6.27%;
- 15-year fixed-rate mortgages, 5.63% from 5.70%;
- and five-year ARMs, 5.9% from 5.94%.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances, greater than $806,500, was the only type to see an increase, a rise to 6.48% from 6.44%.
