The MBA's Market Composite Index, a measure of weekly application activity based on surveys of the trade group's members, climbed up a seasonally adjusted 3.9% for the seven days ending July 12. The uptick reversed previous drops in volume of 0.2% and 2.6% in the prior two surveys. On a year-over-year basis, activity also came in 1.6% higher.
The surge in lending came in a week where the 30-year conforming rate also fell to its lowest mark since March, said Joel Kan, MBA vice president and deputy chief economist.
The average fixed-contract conforming rate among MBA lenders took a 13 basis point drop to 6.87% from 7% seven days earlier. Points used by borrowers to help buy down the rate decreased to 0.57 from 0.6 for 80% loan-to-value ratio applications. Loans with balances below conforming limits of $766,550 in most markets make them eligible for sale to government-sponsored enterprises.
The 30-year jumbo average, likewise, moved down to 7.07% from 7.13% in the previous survey, with borrower points rising to 0.57 from 0.38.
Thirty-year rates for loans guaranteed by the Federal Housing Administration came in at an average of 6.75%, declining 12 basis points from 6.87% a week earlier. Points decreased to 0.81 from 0.92.
Downward movements in 30-year rates propelled refinances to their highest volumes since Aug. 2022, much of it driven by originations of FHA- and Department of Veterans Affairs-backed loans, according to Kan.
The Refinance Index leaped 15.2% week over week, while compared to the same survey period in 2023, it came in 37.3% higher.
FHA refinance transactions rose by over 23% on a weekly basis, while VA-sponsored applications increased almost 40%. The share of total refinances relative to overall volume also grew to 38.8% from 34.9%.
"While FHA and VA refinance applications accounted for a significant share of the increase, these are likely recently originated loans with even higher than current offered rates," Kan said in a press release.
The latest resurgence in refinances in MBA's data corresponds to multiple reports from other housing researchers,
Refinance activity last week more than offset the pullback in MBA's seasonally adjusted Purchase Index, which retreated 2.7% from the previous survey period. Purchase volumes were also 14% lower from a year earlier.
While affordability conditions are improving thanks to falling rates and rising inventory,
At the same time, last week's average purchase-loan size in MBA's survey may be showing glimpses of downward price pressure resulting from an unaffordable housing market. The mean purchase amount came in at $416,900, the lowest mark since January. Seven days earlier, the average finished at $425,100.
The growth in federally backed refinances lifted the seasonally adjusted Government Index up 14.1% from the previous week. Government-backed applications also nabbed a greater share of the market thanks to the rise.
FHA-backed mortgages accounted for 13.5% relative to total volume, climbing from 12.5% seven days earlier. The share of VA-guaranteed applications saw even larger growth with 15.2% of the markett, up from 13.7%. The slice of activity from the U.S. Department of Agriculture remained unchanged at 0.4%.
As it did with 30-year averages, the 15-year fixed contract rate dropped, declining to 6.49% from 6.63% week over week. The average number of points used to buy down the rate decreased to 0.5 from 0.61 for 80% LTV-ratio loans.
Bucking the downward trend, the average of the 5/1 adjustable-rate mortgage, which starts with a fixed 60-month term, jumped 11 basis points to 6.33% from 6.22%. Points inched down to 0.58 from 0.6.
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