Refi Volume Picks Up Giving Rise To Mortgage Application Activities

According to the Mortgage Bankers Association, the up-and-down pattern for mortgage application activity continued, as volume rose 4.6% from one week earlier led by refinancings.

Since the start of September, the pattern has been a week of increased application volume followed by a down one, echoing trends in refi activity.

The MBA’s Weekly Mortgage Applications Survey for the week ending Oct. 2 found that the refinance index was 50% higher than last year the same week and now increased 8% compared to one week ago. 

The refinance share of mortgage activity increased to 65.4% of total applications from 63.3% the previous week.

Joel Kan, the MBA’s associate vice president of economic and industry forecasting, said in a press release, ”Mortgage rates declined across the board last week, with most falling to record lows and borrowers responded. 

The refinance index hit its highest level since mid-August. Continuing the trend seen in recent months, the purchase market is growing at a strong clip, with activity last week up 21% from a year ago. 

The average loan size increased again to a new record at $371,500, as activity in the higher loan size categories continues to lead growth.”

However, the purchase index decreased 2% on a seasonally adjusted basis and 1% unadjusted compared with the previous week.

“There are signs that demand is waning at the entry-level portion of the market because of supply and affordability hurdles, as well as the adverse economic impact the pandemic is having on hourly workers and low and moderate income households. 

As a result, the lower price tiers are seeing slower growth, which is contributing to the rising trend in average loan balances,” Kan added.

Adjustable-rate mortgage activity remained unchanged at 2.2% of total applications, while the share of Federal Housing Administration-insured loan applications was 11.4 last week, which decreased to 11%.

The share of applications for Veterans Affairs-guaranteed loans increased from 11.9% to 12.2% 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) fell to a record low as measured by the MBA, decreasing 4 basis points to 3.01%.

For jumbo 30-year FRMs (loan balances greater than $510,400), the average contract rate decreased 2 basis points to 3.31%.

Average contract interest rates for 30-year FHA-insured FRMs decreased 3 basis points to 3.12%. For 15-year FRMs, the average contract interest rate decreased 6 basis points to 2.59%, and for 5/1 ARMs, it decreased to 2.8% from 2.95%.