Mortgage application activity roared out of the gate in the first week of the New Year, as the country got back down to business.  Much of the week's gain could probably be attributed to consumers catching up after the usual holiday induced December slowdown. Applications for both refinancing and home purchasing were up substantially during the week ended January 5. It was, in fact, the strongest week for refinancing applications since mid-July.

The Mortgage Bankers Association said its Market Composite Index, a measure of loan applications volume, increased 8.3 percent on a seasonally adjusted basis and rose 46 percent compared with the week ended December 29 on an unadjusted basis. The week's report included an adjustment to account for the New Years Holiday. MBA said there was also a revision of unspecified degree to the December 29 report.

There was a 5 percent increase in the seasonally adjusted Purchase Index compared to the previous week while the unadjusted index was 44 percent higher. The unadjusted index was down 1 percent relative to the same week in 2017.  

The Refinance Index increased 11 percent from the previous week. The share of applications that were for refinancing increased from 52.1 percent to 52.9 percent.

The FHA share of total applications increased to 11.1 percent from 10.8 percent the previous week and the USDA share declined to 0.7 percent from 0.8 percent. The VA share was unchanged at 11.4 percent.

New and higher conforming loan limits went into effect on January 1 and were reflected for the first time in this week's report.  The average contract interest rate for 30-year fixed-rate mortgages (FRM) with loan balances of $453,100 or less increased to 4.23 percent from 4.22 percent.  Points declined to 0.35 from 0.37 and the effective loan rate was unchanged from the prior week.  

The average contract interest rate for 30-year FRM with jumbo loan balances higher than $453,100, rose to 4.16 percent with 0.23 point from 4.14 percent with 0.22 point. The effective rate also increased.   

Thirty-year FRM backed by the FHA had an average rate of 4.16 percent, down 1 basis point from the previous week.  Points increased to 0.42 from 0.40 and the effective rate moved lower.

The average contract interest rate for 15-year FRM rose to 3.66 percent from 3.64 percent and points moved from 0.34 to 0.42.  The effective rate increased from last week.

The share of applications submitted for adjustable rate mortgages fell from 5.3 percent the previous week to the lowest level since mid-November 2016, 5.0 percent.  The average contract interest rate for 5/1 ARMs decreased to 3.50 percent from 3.53 percent, with points decreasing to 0.51 from 0.53.  The effective rate decreased from last week. 

MBA's Weekly Mortgage Applications Survey has been conducted since 1990 and covers over 75 percent of all U.S. retail residential mortgage applications.  Respondents include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100 and interest rate information is based on loans with an 80 percent loan-to-value ratio and points that include the origination fee.