Mortgage application volume jumped 5% on an adjusted basis during the week ended January 31, as the average rate for a 30-year fixed-rate mortgage fell yet again to 3.71%, down from 3.81% the previous week, according to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey.
Applications for refinances increased 15% while applications for purchases decreased 10%.
The previous week’s results included an adjustment for the Martin Luther King holiday.
On an unadjusted basis, total volume increased 20% compared with the previous week.
Applications for purchases increased 8% on an unadjusted basis and were up 11% compared with the same week one year earlier.
Refinance volume was up 183% compared with a year ago.
“The 10-year Treasury yield fell around 20 basis points over the course of last week, driven mainly by growing concerns over a likely slowdown in Chinese economic growth from the spread of the coronavirus,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement.
“This drove mortgage rates lower, with the 30-year fixed rate decreasing for the fifth time in six weeks to 3.71 percent, its lowest level since October 2016. Refinance activity jumped as a result, with an increase in the number of applications and a spike in the average loan amount, as homeowners with jumbo loans reacted more resoundingly to lower rates,” Kan notes.
He adds that “prospective buyers weren’t as responsive to the decline in mortgage rates – likely because of suppressed supply levels.”
The refinance share of mortgage activity increased to 64.5% of total applications, up from 60.4% the previous week.
The adjustable-rate mortgage (ARM) share of activity increased to 5.9% of total applications.