Som activity still struggles against tight housing supply
Mortgage loan application volume grew 3.7% week over week, driven by an increase in refinance applications.
The Mortgage Bankers Association reported the uptick in its market composite index for the week ending February 2. When looking at the numbers without seasonal adjustments, the overall application figure actually jumped by 8% compared to the previous week.
A significant part of this rise comes from the refinance index, which shot up by 12% from the prior week and saw a year-over-year increase of 1%. The purchase index dipped by 1% on a seasonally adjusted basis from the previous week, even though the unadjusted purchase index rose by 6% from the week before but was still 19% lower than the same week last year.
“Mortgage rates have stayed close to where they started the year, despite swings in Treasury yields because of slowing inflation offset by stronger than expected readings on the job market. The 30-year fixed-mortgage rate was 6.8%, a slight increase from last week,” MBA deputy chief economist Joel Kan said in the report.
Kan noted that the current mortgage rates haven’t significantly impacted refinancing activity, largely because most homeowners are locked into lower rates.
“While we’ve seen a strong start to 2024 for purchase activity, surpassing the last quarter of 2023, it still falls short of last year’s figures, primarily due to the ongoing issue of low housing supply,” he added.
Further data from the MBA’s survey reveals shifts in the makeup of mortgage applications. The refinance share of mortgage activity edged up to 35.4% of total applications from 34.2% the week before. Meanwhile, the share of adjustable-rate mortgages (ARMs) in total applications decreased to 6.4%.
Looking at government-backed loans, FHA loans saw their share of total applications dip to 13.1% from 13.8%, whereas VA shares increased to 14.1% from 13.3%. The portion of applications for USDA loans remained steady at 0.4%, unchanged from the previous week.
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