Increased activity signals early buyer movement in the market despite lags elsewhere
Mortgage applications have continued to increase, with a modest uptick of 3.7% for the week ending January 19, the Mortgage Bankers Association reported today.
MBA reported a 3.7% rise in its Market Composite Index, a measure of mortgage application volume, with seasonal adjustments for the MLK holiday factored in. However, the unadjusted index was down 4% compared to the previous week.
A notable increase in the seasonally adjusted purchase index by 8% over the previous week indicates a growing trend in home purchase activity. The unadjusted purchase index also rose by 3% from the prior week but was down 18% compared to the same period last year.
“Mortgage rates increased slightly last week, but there continues to be an upward trend in purchase activity. Conventional and FHA purchase applications drove most of the increase last week as some buyers moved to act early this season,” said Joel Kan, MBA’s deputy chief economist.
Meanwhile, refinance applications experienced a 7% decrease from the previous week after adjustments for the holiday, and were down by 8% compared to the same week last year. The refinance share of total mortgage activity also fell, reaching 32.7% of total applications, a drop from the previous week’s 37.5%.
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“Refinance applications declined over the week and remained at low levels. There is still little incentive for homeowners to refinance with rates at these levels,” Kan said.
Applications for the adjustable-rate mortgage (ARM) loan increased, accounting for 6.3% of total applications. In terms of loan types, the FHA share of total applications decreased slightly to 14.1% from 14.3%, the VA share decreased to 13.7% from 14.2%, and the USDA share of total applications fell to 0.4% from 0.5% the previous week.
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