Refinancing continued to buoy up mortgage application volume during the week ended January 22 as interest rates fell back to levels last seen in the mid-fall of 2015.  Purchase mortgage applications also increased even as an epic blizzard descended on the South and Northeast.

The Mortgage Bankers Association (MBA) reported this week that its Market Composite Index, a measure of loan application volume, increased 8.8 percent on a seasonally adjusted basis compared to the week ended January 15.  The results include an adjustment to account for the Martin Luther King holiday which shortened the work week although not universally. On an unadjusted basis the index was up 0.3 percent.

The Refinance Index gained 11 percent from the previous week and the refinance share of mortgage activity dipped to 59.0 percent of all mortgage applications from 59.1 percent the previous week.

The seasonally adjusted Purchase Index was up 5 percent from the previous week. The unadjusted Purchase Index increased 0.4 percent week-over-week and was 22 percent higher than during the same week in 2015.

Refinance Index vs 30 Yr Fixed

Purchase Index vs 30 Yr Fixed

The FHA share of total applications dropped 1 point to 12.7 percent and the VA share rose to 11.1 percent from 10.8 percent a week earlier. The USDA share of total applications remained unchanged at 0.7 percent.

Both contract and effective interest rates dropped during the week. The average contract interest rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances ($417,000 or less) fell to its lowest level since October 2015, 4.02 percent, from 4.06 percent.  Points also eased, from 0.41 to 0.40. 

Rates for 30-year FRM with jumbo loan balances (greater than $417,000) went from an average of 3.93 percent to 3.89 percent. Points decreased to 0.25 from 0.31  

FHA backed 30-year FRM had a rate of 3.83 percent, down from 3.86 percent the week before.  Points rose to 0.38 from 0.36 

There was a 1 basis point dip in the average contract interest rate for 15-year FRM which averaged 3.28 percent for the week.  Points dropped to 0.37 from 0.39.  

The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) fell 11 basis points to 3.09 percent while points rose to 0.34 from 0.18.  There was a 0.9 point rise in the share of ARM applications, bringing that share to 6.9 percent of all mortgage applications, the highest since mid-October 2015.  

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