Mortgage Applications Jumped 13.5% on Lower Rates

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For a second consecutive week, mortgage application volume jumped double digits, due mostly to a surge in refinance activity resulting from falling mortgage rates.

According to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey, total application volume increased 13.5% on an adjusted basis during the week ended January 11.

Applications for refinances increased 19% compared with the previous week to reach the highest level since March 2018.

Applications for purchases increased 9% to reach the highest level since April 2010.

On an unadjusted basis, total volume increased 45% compared with the previous week.

Applications for purchases increased 43%, on an unadjusted basis, and were 11% higher compared with the same week one year earlier.

“Mortgage applications rose to their strongest level in years last week, with purchase applications rising to the highest since 2010, and refinance applications up to their highest level since last spring,” says Mike Fratantoni, senior vice president and chief economist for the MBA, in a release. “Uncertainty regarding the government shutdown, slowing global growth, Brexit, a more patient Fed, and a volatile stock market continued to keep rates from increasing. The spring home buying season is almost upon us, and if rates stay lower, inventory continues to grow, and the job market maintains its strength, we do expect to see a solid spring market. The 11 percent gain in purchase volume compared to last year is a promising sign.”

Fratantoni adds that “borrowers with larger loans tend to be more responsive to a given drop in mortgage rates, and we are seeing that so far in 2019.”

“Furthermore, borrowers with jumbo loans are also more apt to take adjustable-rate mortgages as opposed to fixed-rate loans,” he says. “Thus, it is not surprising to see the ARM share at its highest level since 2014. These borrowers may also feel more confident taking an adjustable-rate mortgage given the expectation of a more patient Fed.”

The refinance share of mortgage activity increased to 46.8% of total applications, up from 45.8% the previous week.

The adjustable-rate mortgage (ARM) share of activity increased to 9.2% of total applications –  the highest level since October 2014.

The average loan size for refinance applications reached a survey high at $353,100.

The average rate for a 30-year fixed-rate mortgage, based on closings, was flat compared with the previous week at 4.74%.

The average rate for a 5/1 ARM was 4.08%, up from 4.05%.

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