Mortgage Applications Volume Jumps 14.2 Percent as Positive Momentum Continues

Mortgage ApplicationsMortgage applications, which have been on the upswing for the past few weeks, continued moving in an upward trajectory in the latest Mortgage Bankers Association Weekly Mortgage Applications Survey, which covers the week ended January 16, 2015.

According to the MBA’s new data, total mortgage applications rose by 14.2 percent from last week, with seasonal adjustment; this metric, the Market Composite Index, covers both purchase and refinance applications. Without seasonal adjustment, the Market Composite Index was up by 17 percent week-over-week. The Refinance Index was also up substantially, moving up by 22 percent from the week prior. With seasonality factored in, the Purchase Index had dropped by 3 percent week-over-week, but was still 3 percent higher than its level on an unadjusted basis, and compared to one year ago to this date.

“Mortgage application volume increased last week to its highest level since June 2013, led by a 22 percent increase in refinance application volume,” said MBA chief economist Michael Fratantoni in statement. “This increase was largely due to mortgage rates dropping to their lowest level since May 2013.” He also explained that the recent move of the Federal Housing Authority to reduce mortgage premiums played a key part, as FHA refinances were up 57 percent week-over-week. Even then, refinances still took up 48 percent of all FHA loan applications, as to 73 percent of all VA loans, and 77 percent of conventional loans.

Conventional refinance application volume was up 21 percent from the week prior, while government refinances (FHA, VA, USDA) were up 29 percent over the same period. As Fratantoni explained, the main variable influencing the big increase in government-backed refinances was a 57 percent jump in FHA loan applications. As such, the FHA share of all refinance applications also moved up from 4.1 percent for the week ended January 9 to 5.2 percent for the most recent week.

The refinance share of all mortgage applications, which was teetering around the 50 percent mark at some points last year, increased further, moving up from 71 percent to 74 percent and hitting the highest share since May 2013. Adjustable-rate mortgages took up a 6.4 percent share of all applications. The FHA share of mortgage applications ticked up from 7.5 percent to 8 percent, the VA share moved down from 9.7 percent to 9.4 percent, while the USDA share slipped a bit, edging downward from 0.8 percent to 0.6 percent.

The average interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) was down to its lowest level since May 2013, slipping from 3.89 percent to 3.80 percent. 30-year jumbo mortgages ($417,001 or more) also hit a 20-month low, losing two basis points from 3.88 percent to 3.86 percent. 30-year FHA-backed FRMs, once again, were at a 20-month low, slipping five basis points from the prior week’s 3.71 percent to 3.66 percent.

15-year FRMs were a fourth mortgage type hitting an all-time low since May 2013, as rates retreated by six basis points from 3.16 percent to 3.10 percent. Finally, 5/1 ARMs were at their lowest since June 2013, moving down from 2.94 percent to 2.87 percent. All the above rates are for loans with an 80 percent loan-to-value ratio.