Refinancing Accounts for Lion’s Share of Mortgage Applications as Activity Hits 2-Year High
The article discusses the significant increase in mortgage applications, primarily driven by refinancing activities. The 30-year fixed mortgage rate has decreased for the eighth consecutive week to 6.13%, while the FHA rate has dropped to 5.99%, breaking the 6% psychological barrier. This decline in rates follows the Federal Reserve's recent 50-basis point rate cut.
According to the Mortgage Bankers Association's (MBA) Weekly Applications Survey for the week ending September 20, 2024, mortgage applications have surged by 11.0% from the previous week, reaching a two-year high. This marks the fifth consecutive week of increases, with refinancing activities accounting for the majority of applications. The MBA's Market Composite Index, which measures mortgage loan application volume, also showed an 11.0% increase on a seasonally adjusted basis from the previous week.
The Refinance Index saw a substantial 20% increase from the prior week and is up 175% compared to the same week last year. The refinance share of mortgage activity rose to 55.7% of total applications, up from 51.2% the previous week. Joel Kan, MBA’s vice president and deputy chief economist, noted that mortgage applications have reached their highest level since July 2022, driven by a 20% increase in refinance applications following a significant rise the previous week.
Kan highlighted that the decrease in rates has led to sharp week-over-week gains for both conventional and government refinance applications. Despite the seasonal slowdown in purchase activity, refinance applications now account for the majority of mortgage applications. The average loan sizes for both purchase and refinance applications have increased, pushing the overall average loan size to a record high of $413,100.
Additional statistics from MBA's weekly report include:
- The adjustable-rate mortgage (ARM) share of activity remained unchanged at 5.9% of total applications.
- The FHA share of total applications decreased to 15.0% from 15.2% the previous week.
- The VA share of total applications increased to 18.3% from 16.8% the previous week.
- The USDA share of total applications decreased to 0.3% from 0.4% the previous week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 6.13% from 6.15%, with points increasing to 0.57 from 0.56 for 80% loan-to-value ratio (LTV) loans. The effective rate also decreased from the previous week.
For 30-year fixed-rate mortgages with jumbo loan balances (greater than $766,550), the average contract interest rate increased to 6.47% from 6.41%, with points decreasing to 0.50 from 0.55 for 80% LTV loans. The effective rate increased from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 5.99% from 6.12%, with points decreasing to 0.79 from 0.81 for 80% LTV loans. The effective rate decreased from the previous week.
The average contract interest rate for 15-year fixed-rate mortgages increased to 5.47% from 5.42%, with points decreasing to 0.52 from 0.70 for 80% LTV loans. The effective rate remained unchanged from the previous week.
The average contract interest rate for 5/1 ARMs increased to 5.76% from 5.66%, with points decreasing to 0.44 from 0.49 for 80% LTV loans. The effective rate increased from the previous week.
The article concludes by providing a link to the full report and listing related posts and tags associated with the content.
