Both purchase and refinance applications increase as the housing market picks up steam
A combination of pent-up demand, low mortgage rates and the easing of lockdown measures fueled the upward trend in mortgage applications last week.
Data from the Mortgage Bankers Association latest survey showed that overall applications jumped 9.3% week over week, including an adjustment for the Memorial Day holiday. Unadjusted, the market composite index spiked 20% from the prior week.
The refinance index posted an 11-percentage-point, week-over-week increase and was 80% higher than the same period a year ago. The seasonally adjusted purchase index rose 5% from the week before, while the unadjusted purchase index was up 15% week over week and up 13% year over year.
"The recovery in the purchase market continues to gain steam, with the seasonally adjusted index rising to its highest level since January. Purchase activity increased for the eighth straight week and was a notable 13% higher than a year ago," said Joel Kan, MBA's associate vice president of economic and industry forecasting. "Refinances moved higher for the first time in nearly two months, with both conventional and government applications rising and the overall index coming in 80% above year-ago levels."
The refinance share of mortgage activity grew for the first time in almost two months, up from 59.5% to 61.3% of total applications. The adjustable-rate mortgage share of activity edged down to 3.1% of total applications.
Both conventional and government applications also increased: the FHA share of total applications climbed from 11.2% to 11.5% the week prior, the VA share of total applications went up from 12% to 12.3%, and the USDA share of total applications dropped from 0.7% to 0.6%.
