The Mortgage Banker’s Association or MBA recently released the results of a survey for the week ending on October 2, 2020.
The volume of mortgage loan applications increased by 4.6% from the previous week on a seasonally adjusted basis, which is 5% on an unadjusted basis. The Refinance Index also rose by 8% from the week before, which is 50% higher than it was from the same week last year.
The rise in mortgage loan application volume may very well be linked to the decrease in mortgage rates that MBA has reported. Many interest rates have fallen to record lows, according to MBA's Associate VP of Economic and Industry Forecasting, Joel Kan.
"Continuing the trend seen in recent months, the purchase market is growing at a strong clip, with activity last week up 21% from a year ago,” Kan says. “The average loan size increased again to a new record at $371,500, as activity in the higher loan size categories continues to lead growth."
Kan also reports that there may be a decreasing demand at the housing market’s entry level “because of supply and affordability hurdles, as well as the adverse economic impact the pandemic is having on hourly workers and low-and moderate-income households.”
This is likely a cause for the recent rise in average loan balances.
MBA also reports that the refinance share of mortgage activity increased slightly to 65.4% from the previous week’s 63.3%. The adjustable-rate mortgage, however, remained the same from the week before.
The survey found that the average contract interest rate for 30-year fixed-rate mortgages with loan balances exceeding $510,400 decreased from 3.33% to 3.31%. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA also went down from 3.15% to 3.12%.
MBA’s survey shows that the average contract interest rate for 15-year fixed-rate mortgages decreased from 2.65% to 2.59%, “with points decreasing to 0.36 from 0.49 (including the origination fee) for 80 percent LTV loans.”
The last significant decrease of interest rates of the week surveyed by MBA was for contract interest rates for 5/1 ARMs, which lowered to 2.80% from the previous week’s 2.95%.