Mortgage applications rose by 13.5% on a seasonally-adjusted basis over the week ending January 11th, 2019, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey. As of the latest survey, applications have risen to their highest level since February 2018.
On an unadjusted basis, the Market Composite Index, a measure of mortgage loan application volume, rose 45% over the previous week. The Refinance Index rose by 19% over the same period, up to its highest level since March 2018. The seasonally-adjusted Purchase Index rose 9% from the previous week, up to its highest level since April 2010, and the unadjusted Purchase Index rose 43%.
“Uncertainty regarding the government shutdown, slowing global growth, Brexit, a more patient Fed, and a volatile stock market continued to keep rates from increasing,” says Mike Fratantoni, MBA’s senior vice president and chief economist. “The spring homebuying season is almost upon us, and if rates stay lower, inventory continues to grow, and the job market maintains its strength, we do expect to see a solid spring market. The 11 percent gain in purchase volume compared to last year is a promising sign.”
The refinance share of mortgage activity rose to 46.8%, the highest level since January 2018, from 45.8% the previous week. The adjustable-rate mortgage (ARM) share of activity rose to 9.2% of total applications, the highest level since October 2014, and the average loan size for refinance applications rose to a survey high of $353,100.
The FHA share of total applications rose to 10.9% from 10.3%. The VA share of total applications fell to 10.4% from 11.6%, and the USDA share fell to 0.5% from 0.6% the previous week.
“Borrowers with larger loans tend to be more responsive to a given drop in mortgage rates, and we are seeing that so far in 2019,” adds Fratantoni. “Furthermore, borrowers with jumbo loans are also more apt to take adjustable-rate mortgages as opposed to fixed-rate loans. Thus, it is not surprising to see the ARM share at its highest level since 2014. These borrowers may also feel more confident taking an adjustable-rate mortgage given the expectation of a more patient Fed.”
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) remained unchanged at 4.74%. Points for 80% loan-to-value ratio (LTV) loans fell to 0.45 from 0.47 the previous week. (All 80% LTV loan reports include the origination fee.) The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) rose to 4.53% from 4.52%. Points for 80% LTV loans rose to 0.31 from 0.28, and the effective rate increased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA rose to 4.76% from 4.70%. Points for 80% LTV loans rose to 0.52 from 0.47, and the effective rate increased from last week.
The average contract interest rate for 15-year fixed-rate mortgages fell to its lowest level since April 2018 at 4.13%, down from 4.16%. Points for 80% LTV loans rose to 0.45 from 0.35, and the effective rate remained unchanged from last week.
The average contract interest rate for 5/1 ARMs rose to 4.08% from 4.05%. Points for 80% LTV loans remained unchanged at 0.32, and the effective rate increased from last week.
