Mortgage applications volume zoomed up by 49.1 percent from the previous week in the Mortgage Bankers Association’s Weekly Mortgage Applications Survey covering the week ended January 9, 2015.
The year appears to be off to a great start, as the seasonally adjusted Market Composite Index, which combines purchase and refinance application volume, jumped by 49.1 percent from the week prior. Without seasonal adjustment, the improvement was even bigger, at 119 percent.
The Refinance Index leaped up by 66 percent week-over-week, reaching its highest level since July 2013. The Purchase Index with seasonality, on the other hand, improved by 24 percent from the previous week, and hit its highest level since September 2013. Without seasonality, the Purchase Index was up 83 percent week-over-week and 2 percent year-over-year. The refinance share of mortgage activity, which had been in the 50 percent range at some points last year, improved drastically from 65 percent to 71 percent.
In a statement, MBA chief economist Michael Fratantoni said that international concerns and plummeting oil prices were the factors that led to this week’s trends of lower interest rates, and subsequently more life in terms of mortgage applications. “Mortgage rates reached their lowest level since May of 2013, and refinance application volume soared, more than doubling on an unadjusted basis, and up 66 percent after adjusting for the fact that the previous week included the New Year’s holiday,” he continued. “…the average conventional refinance application increased to $298,700 from $233,500 the prior week. Although there was a somewhat smaller increase for government refinance volume, VA refinance applications increased by 50 percent. VA loans tend to be larger than FHA and USDA loans, and hence are more responsive to a given rate change.”
In addition, Fratantoni said in his statement that there were other variables responsible for the big improvements on the MBA’s report. These included improvements in the U.S. employment market, wider credit availability, and the Federal Housing Administration’s announcement that it will be reducing mortgage insurance premiums.
Talking about interest rates on fixed-rate products, the average mortgage rate for 30-year fixed-rate mortgages with conforming ($417,000 or less) loan balances dipped 12 basis points from 4.01 percent to 3.89 percent; this was the lowest level on the MBA’s records since May 2013. Points were down from 0.28 to 0.23. For 30-year jumbo mortgages ($417,001 or more), interest rates slipped 11 basis points from 3.99 percent to 3.88 percent, and also reached a 20-month low, with points down from 0.24 to 0.23. The average interest rate for 30-year FHA-backed fixed mortgages also took a double-digit dive from 3.81 percent to 3.71 percent, with points down from -0.03 to -0.05.
15-year fixed-rate mortgages, which were at 3.24 percent previously, slipped eight basis points to 3.16 percent. Points for 15-year FRMs were steady at 0.30. In both cases, rates also hit their lowest point since May 2013.
For adjustable-rate mortgages, the average mortgage rate for 5/1 adjustable-rate mortgages dove down 25 basis points – one quarter of a percentage point – from 3.19 percent to 2.94 percent, marking the lowest level on record since October 2014. Points were down from 0.51 to 0.46.