A fall in interest rates led to a weekly uptick in mortgage applications, notably for refinancing, which saw its highest pace of activity in over a month, the Mortgage Bankers Association said in its latest report.
The MBA’s Market Composite Index posted a seasonally adjusted 2% increase in application volume from
Driving the increase was the Refinance Index, which showed a 3% boost from one week earlier, rising to a point not seen since March. The index recorded a year-over-year drop of 12%. The sizable weekly jump was spurred by borrowers seeking more amenable terms, according to Joel Kan, the MBA's associate vice president of economic and industry forecasting.
“The decline in rates helped the refinance index reach its highest level in eight weeks, driven by a 4% increase in conventional refinances. Additionally, refinance loan balances increased for the fourth straight week, an indication that higher-balance borrowers acted to take quick advantage of lower rates,” he said in a press release.
The refinance share of mortgage volume for the week rose to 61.3%, up from 61% percent the previous week.
Homebuyers also responded to the interest rate dip, lifting the Purchase Index up 1% from the prior week on a seasonally adjusted basis. The unadjusted figure also increased 1% compared to the previous week and was up 13% from the same period one year ago, which was close to
the time the housing market began to emerge from the pandemic-induced stall in activity.
“Most markets this spring continue to see robust demand, but activity continues to be constrained by insufficient inventory levels, as well as home builder challenges related to the ongoing shortages and price increases for building materials,” Kan said.
The average size of new mortgages remained relatively stable. The overall average mortgage size edged up slightly to $337,700 from $337,000 a week earlier. The average mortgage amount for purchases increased to $409,800, compared to 408,100 the previous week, while the mean refinance loan size also increased to $292,300 from $291,500.
Adjustable-rate mortgages accounted for 3.8% of total volume, down from 3.9% the previous week.
Mortgages insured by the Federal Housing Authority fell to 9.9% of total volume, compared to 10.1% the week prior, while loans guaranteed by Veterans Affairs ticked down to 11.7% from 11.9%. However, the share of U.S. Department of Agriculture/Rural Housing Service mortgages increased to 0.5% from 0.4% the previous week.
The average contract interest rate of 30-year fixed-rate mortgages with conforming loan balances of $548,250 or less fell seven basis points to 3.11% from 3.18% the previous week, while the average contract interest rate for jumbo loans with higher balances also decreased to 3.27% from 3.31%.
The 30-year fixed-rate for FHA-backed loans dropped to 3.07% from 3.13% the prior week.
The average rate of 15-year fixed-rate mortgages fell to 2.49%, compared to 2.54% a week earlier, and the average contract interest rate of 5/1 ARMs stood at 2.57%, down from 2.76% week over week.
