On the strength of demand for refinancings, mortgage applications surged 12.8% last week from one week earlier (which included the Thanksgiving holiday), according to the latest data from the Mortgage Bankers Association (MBA).
The MBA's Market Composite Index, which measures mortgage loan application volume, increased 12.8% on a seasonally adjusted basis and 60.2% on an unadjusted basis. The Refinance Index increased 15.3%, while the Purchase Index grew 8.3% and 47.2% on a seasonally adjusted basis and an adjusted basis, respectively, from one week before.
‘Coming out of the Thanksgiving holiday, applications increased significantly as mortgage rates dropped to their lowest levels in about two months,’ says Michael Fratantoni, MBA's vice president of research and economics. ‘In particular, refinance applications increased sharply, with some lenders seeing refinance volume double."
While up from the previous week, aggregate refinance activity is still below levels reported two weeks ago, Fratantoni says. Although increased activity pertaining to Home Affordable Refinance Program (HARP) loans may be around the corner, lenders are not yet reporting significant increases, he adds.
"Some lenders indicated they are beginning to see an increase in HARP loans, but that increase is still a small portion of the move this week," Fratantoni says.
The refinance share of mortgage activity increased to 76% of total applications from 73.9% the previous week, while the adjustable-rate mortgage share decreased to 5.7% from 5.8%.