Purchase mortgage application volume reached its highest level in almost nine years as homebuyers took advantage of what might be a fleeting window for lower interest rates.
The Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ending Jan. 11 increased 13.5%
The seasonally adjusted purchase index increased 9% from one week earlier to its highest level since April 2010, while the unadjusted purchase index increased 43% compared with the previous week and was 11% higher than the same week one year ago.
The refinance index increased 19% over the prior week. Meanwhile, the refinance share of mortgage activity increased to its highest level since January 2018, 46.8% of total applications, from 45.8% the previous week.
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Adjustable-rate loan activity increased to 9.2% from 8.4% of total applications, while the share of Federal Housing Administration-guaranteed loans increased to 10.9% from 10.3% the week prior.
"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. 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," Fratantoni said.
The share of applications for Veterans Affairs-guaranteed loans decreased to 10.4% from 11.6% and the U.S. Department of Agriculture/Rural Development share decreased to 0.5% from 0.6% the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) remain unchanged at 4.74%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350), the average contract rate increased 1 basis point to 4.53%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased 6 basis points to 4.76%. For 15-year fixed-rate mortgages, the average decreased 3 basis points to 4.13%. The average contract interest rate for 5/1 ARMs increased 3 basis points to 4.08%.