Recent drop in rates and Treasury Yields spurs growth
US mortgage applications have posted a double-digit increase, bolstered by lower mortgage rates and Treasury yields.
Loan applications jumped 10.4% on a seasonally adjusted basis during the week ending January 12, according to the Mortgage Bankers Association. MBA’s market composite index also showed applications were up 26% on an unadjusted basis from the week before.
“Mortgage rates declined across all loan types as Treasury yields moved lower last week on incoming inflation data, which helped to support a rise in mortgage applications,” MBA deputy chief economist Joel Kan pointed out in the report. “The 30-year fixed-rate decreased six basis points to 6.75%, the lowest rate in three weeks.”
Refinance applications increased 11% week over week and 10% year over year. Despite the overall rise in mortgage applications, the refinance share of total activity slightly decreased to 37.5% from 38.3% the week before.
Purchase mortgage applications climbed 9% week over week on a seasonally adjusted basis and 28% on an unadjusted basis. However, purchase apps were down 20% compared to a year ago.
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“Compared to a holiday-adjusted week, both purchase and refinance applications were up, and the increases were heavily driven by the conventional market,” Kan said. “Although purchase activity is lagging year-ago levels, refinance applications have improved from their recent low point and have been showing year-over-year gains, albeit at low levels. If rates continue to ease, MBA is cautiously optimistic that home purchases will pick up in the coming months.”
Breaking down the application types, FHA applications dropped one basis point to 14.3%, and VA applications saw a 2.1% decrease to 14.2%. Meanwhile, USDA loan applications saw a one basis point uptick to 0.5%.
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