Mortgage applications hit a weekly swell as borrowers took advantage of a reversal in interest rate movement and brought heightened refinance activity, according to the Mortgage Bankers Association.
Overall loan application volume rose 8.1% for the week ending Jan. 29 on a seasonally-adjusted basis and 10% unadjusted from the week prior. While the purchase index had a modest gain of 0.1%, the refi index shot up 11%, representing an 11-month crest.
“MBA’s refinance index hit its highest level since March 2020 and jumped 60% year-over-year,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a press release.
Purchase activity went unchanged from week to week, he said, adding that a 1% increase in conventional applications cancelled out a 3% decline in government applications.
“Average purchase loan amounts in early 2021 continue to rise across all loan types, driven by a strong pace of home sales, tight housing inventory and high home-price growth,” he said. “Conventional, FHA and VA purchase loan sizes all set new survey records last week.”
The refinance share of loan activity inched up to 71.4% from 70.7% week-over-week. The purchase share declined to 28.6% from 29.3%, but its volume jumped 16% from a year ago. The average purchase loan size climbed to a new record high of $398,600 from $395,200 the week earlier.
The total application share of loans guaranteed by the Federal Housing Administration dropped to 9.1% from 9.4%, the Department of Veterans Affairs loans fell to 12.1% from 12.4% and U.S. Department of Agriculture loans edged down to 0.4% from 0.5%. The share of adjustable-rate mortgages held at 2.2%.