Mortgage apps hit highest weekly level since July

Elevated purchase and refinance activity led to the most active week for new loan applications in over a month, according to the Mortgage Bankers Association.

The MBA’s Market Composite Index, a measure of mortgage application volume based on data submitted by the association’s members, jumped a seasonally adjusted 4.9% for the weekly period ending Sept. 17. Unadjusted volume came in 16% higher compared to the previous holiday-shortened week, while the seasonally adjusted index was 8.1% lower than its level from the same week a year ago.

The Purchase Index posted a 2% increase, seasonally adjusted, and an unadjusted 12% weekly spike. But despite the upturn, the seasonally adjusted purchase volume was still 13% lower compared to the same period in 2020, when the industry found itself in the middle of an unusually busy home buying season. The higher pace of activity held promising signs for potential home buyers in a year dominated by surging prices and limited housing supply.

“Housing demand is strong heading into the fall, despite fast-rising home prices and low inventory,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “The inventory situation is improving, with more new homes under construction and more homeowners listing their home for sale.”

A surge of applications backed by the Federal Housing Administration or Department of Veterans Affairs led the Refinance Index to climb 7% week over week as well, according to Kan. Homeowners took advantage of low interest rates that have barely moved in the past month, but compared to activity from a year ago, refinances registered a 13% decline.

Refinances accounted for 66.2% of all applications, increasing its share from one week earlier when it had fallen to 64.9%. Adjustable rate mortgage volume dropped to 2.9% of total activity, down on a weekly basis from 3.3%.

Government-loans come in higher 
Federally backed applications also rose and increased their share of activity across the most common government-loan types. FHA-backed mortgages accounted for 11.5% of volume, compared to 9.9% one week earlier. Loans sponsored by the VA took a 10.4% share, up from 10.2% the prior week, while mortgages coming through programs offered by the U.S. Department of Agriculture made up 0.5% of all applications, inching up from 0.4% week over week.

The increased popularity of government-sponsored loans helped bring loan sizes down, with the average overall amount falling to $333,200, a 1.6% decrease from $338,500 a week earlier. New purchase mortgages averaged $396,300, edging downward by less than 0.1% from $396,800 recorded in the previous weekly period. And the mean size of refinance loans stood at $301,000, coming in 2% lower on a weekly basis from $307,000.

30-year conforming rate stays put for a month

• For the fourth consecutive week, the average contract interest rate of 30-year fixed-rate mortgages with conforming loan balances of $548,250 remained at 3.03% 

• The average contract interest rate of 30-year fixed-rate jumbo loans with balances greater than $548,250 declined two basis points to 3.11% from 3.13% a week earlier.

• The average contract interest rate for FHA-backed 30-year mortgages headed upward, rising three basis points to 3.07% versus 3.04% the previous week. 

• The contract interest rate for 15-year mortgages remained the same at 2.34% on a week-over-week basis. 

• The contract interest rate for 5/1 adjustable-rate mortgages fell to 2.51% after posting a 2.68% average the prior week.