Is the market roaring back?
Mortgage applications surged by 16.8% in the week ending August 9, 2024, according to the recent Mortgage Bankers Association’s (MBA) Weekly Applications Survey. This significant increase marks the highest application volume since January 2023.
The Market Composite Index, which measures mortgage loan application volume, climbed 16.8% on a seasonally adjusted basis from the previous week. On an unadjusted basis, the Index saw a 15% increase. The Refinance Index, which tracks refinancing activity, rose 35% week over week and was 118% higher compared to the same week in 2023. This surge in refinancing was driven by the recent decline in mortgage rates, the report highlighted.
Joel Kan, MBA’s vice president and deputy chief economist, attributed the increase in mortgage applications to the drop in rates for both 30-year and 15-year fixed-rate mortgages over the past two weeks. “Rates on both 30- and 15-year fixed rate mortgages decreased for the second consecutive week, and combined with the previous week’s rate moves, spurred another strong week for application activity as borrowers with higher rates took the opportunity to refinance,” Kan said.
The seasonally adjusted Purchase Index, which reflects purchase mortgage applications, increased by 3% from the prior week. On an unadjusted basis, the Purchase Index was up 2% but was 8% lower compared to the same week in 2023. Kan noted this modest gain suggested that prospective homebuyers are slowly reentering the market.
The share of refinance applications grew to 48.6% of total applications, up from 41.7% the previous week. The adjustable-rate mortgage (ARM) share also increased to 7.3%. Conversely, the FHA share of total applications rose slightly to 13.5%, while the VA share increased to 16.8%. The USDA share of total applications decreased marginally to 0.3%.
Interest rates show mixed movements across mortgage types
Interest rates for various mortgage products showed mixed movements. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 6.54% from 6.55%, with points decreasing to 0.57 from 0.58. The average rate for 30-year fixed-rate jumbo mortgages rose to 6.78%, up from 6.77%, though points decreased. The rate for 15-year fixed-rate mortgages fell to 5.96%, down from 6.03%, with points decreasing as well.
The 5/1 ARMs saw an increase in average contract interest rates to 6.04% from 5.91%, with points also rising.
Holden Lewis, home and mortgage expert at NerdWallet, noted that the recent drop in mortgage rates, which fell more than one percentage point since last fall, has created a prime opportunity for refinancing. “Mortgage rates have dropped more than one percentage point since last fall, when the 30-year mortgage was flirting with 8%. This decline has opened an opportunity to refinance, especially for people who bought homes from August through November last year,” Lewis said.
He advised that while rates may continue to decline, homeowners must weigh the potential benefits of refinancing now against the possibility of further rate reductions.
The MBA’s Weekly Applications Survey covers over 75% of all US retail residential mortgage applications and has been conducted weekly since 1990.
Do you have something to say about this story? Let us know in the comments below.
