Home loan applications hit their highest level since mid-2022
Mortgage applications jumped to their highest level since July 2022, largely fueled by a surge in refinance activity, according to the Mortgage Bankers Association (MBA).
The latest report, covering the week ending September 20, showed an 11% increase in overall mortgage applications compared to the previous week.
The boost in activity was driven by a 20% spike in refinance applications, building on gains from the prior week. The average rate for 30-year fixed mortgages dipped to 6.13% from 6.15%, which helped push borrowers to take advantage of the lower rates.
“The 30-year fixed-rate decreased for the eighth straight week to 6.13%, while the FHA rate decreased to 5.99%, breaking the psychologically important 6% level,” Joel Kan, vice president and deputy chief economist of MBA.
Kan added that the recent drop in rates has led to gains in both conventional and government-backed refinance applications.
“The refinance share of applications is now at 55.7%, and while the level of refinance activity is still modest compared to prior refi waves, they now account for the majority of applications, given the seasonal slowdown in purchase activity,” he said in the report.
Purchase applications saw a more modest rise of 1%, and the seasonally unadjusted purchase index increased 0.4% week-over-week and was 2% higher than the same week in 2023.
“Average loan sizes were higher both for purchase and refinance applications, which pushed the overall average loan size to its highest in the survey’s history at $413,100,” Kan noted.
MBA’s report also highlighted changes in government-backed loans, with the share of VA loans rising to 18.3%, while FHA loans dipped slightly to 15%. Adjustable-rate mortgages (ARMs) remained steady, making up 5.9% of total applications.
Despite the drop in rates, not everyone is rushing to lock in loans. Melissa Cohn, regional vice president at William Raveis Mortgage, noted that buyers are cautiously optimistic but still waiting for rates to fall further.
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“I have been much busier with clients reaching out asking about lower rates, and what my expectations are for even lower rates [ahead], now that the Fed has enacted their first rate cut,” Cohn said. “While rates dropped nicely in the two weeks before the Fed meeting, they have actually moved up since then.
“I am spending a lot of time telling people that I expect rates to drop but not as quickly as they would like.”
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