Applications for mortgage refinancing scored a second straight week of
solid growth during the period ended January 16, with the Mortgage Bankers
Associations (MBA) Refinance Index increasing 22 percent week-over-week. That's an impressive level of growth in light of the fact that last week's refi activity already posted a 66 percent improvement. The share of mortgage applications
that were for refinancing increased from 71 percent to 74 percent, the highest
share for refinancing since May 2013.
The overall MBA Market Composite Index rose 14.2 percent on a seasonally
adjusted basis and was up 17 percent on an unadjusted basis. Here too, any
additional gains in the Composites were in themselves notable, building as they
were building atop the previous week in which the adjusted and non-adjusted
indexes had roared back from the holiday period with increases of 49.1 percent
and 119 percent respectively.
Refinance Index vs 30 Yr Fixed
Applications for purchase mortgages were much more subdued. The seasonally adjusted Purchase Index was
down 3 percent from the week ended January 9.
The unadjusted Purchase Index rose 3 percent week-over-week and was 3
percent higher than the index during the same week in 2013.
Purchase Index vs 30 Yr Fixed
Mike Fratantoni, MBA's Chief Economist said, "Mortgage application volume increased last week to its highest
level since June 2013, led by a 22 percent increase
in refinance application volume. This increase
was largely due to mortgage
rates dropping
to their lowest level since May 2013. However, the recent reduction in FHA
mortgage insurance premiums also played a role: FHA refinance
applications increased 57 percent last week. Even with this increase, refinances made up only 48 percent
of FHA volume, compared to 73 percent
for VA, and 77 percent for
conventional loans,"
Fratantoni continued, "Conventional purchase
applications were down about 3 percent for the week on a seasonally adjusted basis,
but up 5 percent relative to last year at this time. FHA purchase applications
were down 1 percent for the week on a seasonally adjusted basis."
Conventional refinance applications
increased 21 percent relative to the previous week, while government refinances increased 29 percent. That gain was driven by the 57 percent surge in applications for FHA loans noted by Fratantoni which also boosted
the FHA share of refinance
applications to 5.2 percent
from 4.1 percent the prior week.
The FHA share of total applications
increased to 8.0 percent this week from 7.5 percent last week while the VA
share slipped 3 basis points to a 9.4 percent share. The USDA share of total applications decreased to 0.6
percent from 0.8 percent last week.
Mortgage
interest rates continued to fall with all contract rates for fixed rate
products back to May 2013 levels and effective rates down from the previous
week. The average contract interest rate
for 30-year fixed-rate mortgages (FRM) with conventional balances of $417,000
or less was 3.80 percent with 0.29 point compared to 3.89 percent with 0.23
point a week earlier. The jumbo 30.year
FRM (balances above $417,000) had a rate of 3.86 percent, down 2 basis points
with points unchanged at 0.23.
The average contract interest rate for
30-year fixed-rate mortgages backed by the FHA decreased to 3.66 percent from 3.71 percent.
Points increased to 0.15 from -0.05.
Fifteen-year FRM contract rates backed
down to 3.10 percent from 3.16 percent.
Points dipped to 0.29 from 0.30.
The average contract
interest rate for 5/1 adjustable rate mortgages (ARMs) decreased
to 2.87 percent, the lowest level since June 2013, from 2.94 percent,
with points decreasing to 0.41 from 0.46 The ARM
share of activity increased to 6.4 percent of total applications from 5.9 percent the week
before..
MBA's data is gathered from its Weekly
Mortgage Application Survey which covers over 75 percent of all U.S. retail residential mortgage applications. The survey has been conducted since 1990
among mortgage bankers, commercial banks and thrifts. Base
period and value for all indexes is March 16,
1990=100 and interest rates information is quoted for loans with an 80
percent loan-to-value ratio. Points
include the origination fee.