Driven by low rates, mortgage application volume increased an impressive 8.1% on an adjusted basis during the week ended January 29, according to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey.
Applications for refinances increased 11% compared with the previous week while applications for purchases increased 0.1%.
Year-over-year, applications for refinances were up 59% while applications for purchases were up 16%.
On an unadjusted basis, total volume increased 10% compared with the previous week.
“After increasing for three consecutive weeks, the 30-year fixed mortgage rate dropped three basis points to 2.92 percent,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “The one-week reversal in the recent upswing in rates drove an increase in both conventional and government refinance activity, as borrowers continue to lock in these historically low rates.”
As a result, the MBA’s refinance index “hit its highest level since March 2020,” Kan says.
“Purchase activity was unchanged last week, with a 0.1 percent increase in conventional applications offset by a three percent decline in government applications,” Kan says. “Average purchase loan amounts in early 2021 continue to rise across all loan types, driven by a strong pace of home sales, tight housing inventory and high home-price growth. Conventional, FHA and VA purchase loan sizes all set new survey records last week.”
The refinance share of mortgage activity increased to 71.4% of total applications, up from 70.7% the previous week.
The adjustable-rate mortgage (ARM) share of activity remained unchanged at 2.2% of total applications.