MBA: Mortgage Applications Rebound, Purchase Index Highest Level Since 2010

Inventory Growth, Interest Rates Fuel Sharp Gains for Second Straight Week

The Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey finds applications increased 13.5% for the week ending January 11, 2019. The Market Composite Index is now at its highest level since February 2018.

The seasonally adjusted Purchase Index increased 9% from one week earlier to its highest level since April 2010. The unadjusted Purchase Index increased 43% compared with the previous week and was 11% higher than the same week one year ago.

“Mortgage applications rose to their strongest level in years last week, with purchase applications rising to the highest since 2010, and refinance applications up to their highest level since last spring,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist. “Uncertainty regarding the government shutdown, slowing global growth, Brexit, a more patient Fed, and a volatile stock market continued to keep rates from increasing.”

On an unadjusted basis, the Index increased 45% compared with the previous week. The Refinance Index increased 19% from the previous week to its highest level since March 2018.

“The spring homebuying season is almost upon us, and if rates stay lower, inventory continues to grow, and the job market maintains its strength, we do expect to see a solid spring market,” Mr. Fratantoni added. “The 11% gain in purchase volume compared to last year is a promising sign.”

The refinance share of mortgage activity rose to the highest level since January 2018, at 46.8% of total applications. That’s up from 45.8% the previous week. The adjustable-rate mortgage (ARM) share of activity rose to its highest level since October 2014, at 9.2% of total applications.

The average loan size for refinance applications reached a survey high at $353,100.

“Borrowers with larger loans tend to be more responsive to a given drop in mortgage rates, and we are seeing that so far in 2019,” Mr. Fratantoni also noted. “Furthermore, borrowers with jumbo loans are also more apt to take adjustable-rate mortgages as opposed to fixed-rate loans. Thus, it is not surprising to see the ARM share at its highest level since 2014.”

“These borrowers may also feel more confident taking an adjustable-rate mortgage given the expectation of a more patient Fed.”

The FHA share of total applications rose slightly from 10.3% the week prior to 10.9%. The VA share of total applications fell to 10.4% from 11.6%. The USDA share of total applications also ticked down marginally to 0.5% from 0.6%.

Average Rates

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) remain unchanged at 4.74 percent, with points decreasing to 0.45 from 0.47 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last
week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) increased to 4.53 percent from 4.52 percent, with points increasing to 0.31 from 0.28 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.76 percent from 4.70 percent, with points increasing to 0.52 from 0.47 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to its lowest level since April 2018, 4.13 percent, from 4.16 percent, with points increasing to 0.45 from 0.35 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 5/1 ARMs increased to 4.08 percent from 4.05 percent, with points remaining unchanged at 0.32 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

Mortgage Bankers Association (MBA) Press Release