MortgageMortgage RatesOrigination

Mortgage apps climb 12% on spike in refi demand

The Refinance Index rose 18.4%

Mortgage applications increased 12% from the previous week due to a surprising uptick in demand for “refis” as borrowers try to secure a lower rate, according to the Mortgage Bankers Association (MBA) survey for the week ending Jan. 28.

The seasonally adjusted Refinance Index rose 18.4% in the same period. Meanwhile, the Purchase Index increased 4%.

Compared to the same week one year ago, mortgage apps overall dropped 37%, with a sharp decline in refinance (-50.4%) compared to purchase (-6.7%).

According to Joel Kan, MBA’s associate vice president of economic and industry forecasting, mortgage rates continued to climb, with the 30-year fixed rate rising for the sixth consecutive week to its highest level since March 2020.

The trade group estimates that the average contract 30-year fixed-rate mortgage for conforming loans ($647,200 or less) increased to 3.75% from 3.72% the week prior. For jumbo mortgage loans (greater than $647,200), rates climbed to 3.59% from 3.56% the week prior.

“Despite the increase in rates, refinance applications were up 18%, driven mainly by a 22% jump in conventional applications,” Kan said in a statement. “There has likely been some recent volatility in application counts due to holiday-impacted weeks, as well as from borrowers trying to secure a refinance before rates go even higher.”

How lenders can continue to serve borrowers despite housing affordability challenges

Potential borrowers who’ve been priced out of the housing market need to be able to compete with an increasingly growing share of cash buyers and investors who are beating them in bidding wars.

Presented by: Equifax

Regarding purchases applications, the average loan size hit a new record level at $441,100. “Stubbornly low inventory levels and swift home-price growth continue to push average loan sizes higher,” Kan said.

The survey showed that the refinance share of mortgage activity increased to 57.3% of total applications last week, from 55.8% the previous week. The VA apps dropped to 9.1% from 9.9% in the same period.

The FHA share of total applications decreased to 7.7% from 8.6% the prior week Meanwhile, the adjustable-rate mortgage share of activity increased from 4.4% of total applications to 4.5%. The USDA share of total applications went from 0.5% to 0.4%.

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular Articles

Latest Articles

2024 is not the year to cut corners on staging — here’s why 

With home prices reaching unprecedented heights and interest rates soaring, the discerning nature of today’s buyers requires all agents to employ every possible advantage. Simply put, cutting corners on staging is a risky move that risks prolonged market presence.

3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please