Mortgage applications rose on a seasonally adjusted annual basis during the week ended January 13.  The Mortgage Bankers Association said its Market Composite Index, a measure of applications volume, increased by 0.8 percent compared to the week ended January 6.  On a non-adjusted basis, the volume was up 29 percent.  The previous week's number included an adjustment to account for the New Year's Day holiday.

The slight increase in applications volume was driven by refinancing.  That index climbed by 7.0 percent from a week earlier.  The share of applications which were for refinancing grew from 51.2 percent of the total to 53.0 percent.

The seasonally adjusted Purchase Index decreased 5 percent week-over-week while unadjusted it was up 25 percent. Purchase mortgage applications were down 1 percent compared to the same week in 2016.

The FHA share of total applications increased to 13.1 percent from 11.7 percent--a larger-than-normal jump likely due to the recently-announced reduction in mortgage insurance premiums for FHA loans closing on or after January 27th.  The VA share declined to 12.1 percent from 12.8 percent. The USDA share of total applications was unchanged at 0.9 percent.

Both contract and effective interest rates were mixed during the week.  The average contract interest rate for 30-year fixed-rate mortgages (FRM) reflecting the new conforming limit of $424,000 or less, decreased to the lowest level of the new year, 4.27 percent, from 4.32 percent.  Points decreased to 0.39 from 0.41. The effective rate was also lower than a week earlier. 

The contract interest rate for jumbo 30-year FRM (loan balances greater than $424,000) dropped 5 basis points to 4.22 percent.  Points rose from 0.31 to 0.36 and the effective rate was down.  

The average rate for a 30-year FRM backed by the FHA ticked up to 4.10 percent from 4.08 percent but points fell to 0.28 from 0.35.  This left the effective rate unchanged.   

Fifteen year FRM had an average rate of 3.51 percent, down from 3.56 percent.  Average points dropped to 0.34 from 0.42 and the effective rate declined.  

The share of adjustable rate mortgage (ARM) applications increased to 5.7 percent from 5.5 percent a week earlier.  The average contract interest rate for 5/1 ARMs jumped to 3.44 percent from 3.32 percent, with points decreasing to 0.21 from 0.46.  The effective rate also increased.  

MBA's Mortgage Applications Survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly 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 a loan with an 80 percent loan-to-value ratio and points that include the origination fee.