Mortgage application activity increased 30.2% from one week earlier as purchases were at their highest level in over a decade along with substantial growth in refinancings, according to the Mortgage Bankers Association.
"The mortgage market saw a strong start to 2020," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release. "Applications increased across the board, and the 30-year fixed mortgage rate hit its lowest level since September 2019."
The MBA's Weekly Mortgage Applications Survey for the week ending Jan. 10 found that the refinance index
"Refinances increased for both conventional and government loans, as lower rates provided a larger incentive for borrowers to act," Kan said. "It remains to be seen if this strong refinancing pace is sustainable, but even with the robust activity the last two weeks, the level is still below what occurred last fall."
Meanwhile the seasonally adjusted purchase index increased 16% from one week earlier; on an unadjusted basis it was up 51% and it was 8% higher than the same week one year ago.
"Homebuyers were active the first week of the year. Purchase activity was 8% higher than a year ago, and the purchase index increased to its highest level since October 2009," Kan said. "Low rates and the solid job market continue to encourage prospective buyers to enter the market."
The refinance share of mortgage activity increased to 62.9% of total applications from 58.9% the previous week.
Adjustable-rate mortgage activity increased to 4.5% from 3.8% of total applications, while the share of Federal Housing Administration-insured loan applications increased to 12.7% from 12.2% the week prior.
The share of applications for Veterans Affairs-guaranteed loans decreased to 12.1% from 14.1% and the U.S. Department of Agriculture/Rural Development share remained unchanged at 0.5%.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased 4 basis points to 3.91%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400), the average contract rate decreased 5 basis points to 3.88%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased 7 basis points 3.78%. For 15-year fixed-rate mortgages, the average decreased 5 basis points to 3.3%. The average contract interest rate for 5/1 ARMs increased to 3.35% from 3.19%.
