MBA says refinance activity will continue to grow next year
Despite a slight uptick in mortgage rates, applications for home loans climbed last week to their highest level in over a month.
Data from the Mortgage Bankers Association showed that overall mortgage application volume grew 9.6% on a seasonally adjusted basis and 9% on an unadjusted basis week over week.
"Positive data on consumer sentiment and growing optimism surrounding the US and China trade dispute were behind last week's rise in the 30-year fixed mortgage rate to 4.03%," said Joel Kan, associate vice president of economic and industry forecasting at MBA.
Refinance applications jumped 13% week over week to the highest level in five weeks. Meanwhile, the purchase index was up 5% seasonally adjusted and 2% unadjusted from the week before.
“With rates still in the 4% range, we continue to expect to see moderate growth in refinance activity in the final weeks of 2020," Kan said.
The refinance share of mortgage activity rose to 61.9% of total applications from 59.5% from the prior week. The adjustable-rate mortgage (ARM) share of activity, on the other hand, shrank to 4.9% of total applications.
The FHA loans comprised 13.1% of total applications, up from 11.8%. The VA share of total applications inched up from 12% to 12.7%, while the USDA share dipped from 0.6% to 0.5%.
"Last week was a solid week for homebuyers,” Kan said. “Purchase applications increased 2% and were 15% higher than a year ago. Low supply and high home prices remain a key characteristic of this fall's housing market, which is why the largest growth in activity continues to be in loans with higher loan balances."
