Mortgage applications were on the rise in the latest Mortgage Bankers Association (MBA) Weekly Mortgage Applications Survey for the week ending January 8, with much of the upward energy attributed to “booming refinance activity.”
The Market Composite Index, which is the MBA’s measurement of mortgage loan application volume, saw a 16.7% rise on a seasonally adjusted basis from one week earlier. (The previous week’s results included an adjustment for the year-end holidays.) On an unadjusted basis, the index took a 69% from the previous week.
The seasonally adjusted Purchase Index was 8% above the previous week’s reading while the unadjusted Purchase Index was 60% above the previous week’s level and was 10% higher than the same week one year ago.
The MBA tracked greater upward motion on the refinance side of the business. The Refinance Index increased by 20% from the previous week and was 93% higher than the same week one year ago. The refinance share of mortgage activity increased to 74.8% of total applications from the 73.5% of the previous week.
“Booming refinance activity in the first full week of 2021 caused mortgage applications to surge to their highest level since March 2020, despite most mortgage rates in the survey rising last week,” said Joel Kan, MBA’s AVP of Economic and Industry Forecasting, who noted that “both conventional and government refinance applications increased, with applications for government loans having their strongest week since June 2012.”
Among the federal home loan programs, the MBA reported the FHA share of total applications decreased to 9.6% from 10.1% the week prior as the VA share increased to 15.8% from 13.6% and the USDA share remained unchanged at 0.4%. The adjustable-rate mortgage share of activity decreased to 1.6% of total applications.
“The 30-year fixed mortgage rate climbed two basis points to 2.88 percent, but reversing the trend, the 15-year fixed rate ticked down to 2.39 percent—a record low,” Kan added.