Following the usual holiday lull, mortgage application volume catapulted 30.2% during the week ended Jan. 10, according to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey.
Applications for refinances jumped 43% on an adjusted basis while applications for purchases increased 16%.
The surge in applications was in part due to pent-up demand from home buyers. Due to low mortgage rates, a hot job market and rising wages, demand for existing and new homes is currently strong.
On an unadjusted basis, applications for purchase loans were up 51% compared with the previous week and were up 8% compared with a year ago.
Low mortgage rates also continue to spur strong refinance activity. As the MBA’s data show, applications for refinances were up 109% compared with the same week one year earlier.
“The mortgage market saw a strong start to 2020,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “Refinances increased for both conventional and government loans, as lower rates provided a larger incentive for borrowers to act. It remains to be seen if this strong refinancing pace is sustainable, but even with the robust activity the last two weeks, the level is still below what occurred last fall.
Kan adds that “homebuyers were active the first week of the year.”
“Purchase activity was eight percent higher than a year ago, and the purchase index increased to its highest level since October 2009,” he says. “Low rates and the solid job market continue to encourage prospective buyers to enter the market.”
The refinance share of mortgage activity increased to 62.9% of total applications, up from 58.9% the previous week.
The adjustable-rate mortgage (ARM) share of activity increased to 4.5% of total applications.
The average rate for a 30-year fixed-rate mortgage with conforming loan balance was 3.87% down from 3.91%.