The number of mortgage applications is growing due to refinancing activities


After giving up for two consecutive weeks before levels have not been observed for over a yearAccording to the Mortgage Bankers Association, the mortgage business has reversed course, in part due to declining interest rates.

The Composite Market Index, which tracks mortgage application activity through a survey of MBA attendees, jumped 16% seasonally adjusted for the week ending July 9. Weekly data includes 4 July holiday adjustment. However, the unadjusted index fell 7%. Compared to the same week a year ago, volume was down seasonally by 10.8%.

Both refinancing and buying contributed to the weekly recovery. The refinancing index rose 20% from the previous week and was 29% lower than the same week in 2020. The buying index showed a seasonally adjusted increase of 8% from a week earlier, while the unadjusted index recorded a 13% decline. in volume. The unadjusted buying index was 29% below the level of the same week last year.

Refinancing activities According to Joel Kahn, MBA’s deputy vice president of economic and industry forecasting, the growth sharply due to falling interest rates, while the volume of regular refinancing increased by 23% weekly.

“Treasury yields have declined over the past month as investors remain concerned about the COVID-19 option and slowing economic growth,” Kahn said in a press statement. Mortgage rates match Treasury bond yields, which moved little in late spring and summer.

The increase in refinancing was reflected in their total share in mortgage activities. Refinancing loans accounted for 64.1% of the volume compared to 61.6% a week earlier.

Adjustable rate mortgage applications also took a slightly larger share, accounting for 3.5% of the total, up from 3.3% in the previous week.

The average size of refinancing is increasing; purchases are declining
The growth in refinancing activity was accompanied by a noticeable increase in the amount of refinancing. The average refinancing application price for the first time in three weeks exceeded $ 300,000 to $ 316,300, up 8.6% from $ 291,200 a week earlier. But average purchase volumes fell even as bids began to rise. Average buy order size fell to its lowest level since January, falling to $ 398,600 from $ 405,300 in the previous week. by 1.7%. For only the second time since mid-April, the average purchase size in a week has fallen below $ 400,000.

“We continue to see the ebb and flow as demand for housing remains strong, but stocks for sale remain low. However, lower rates may help some homebuyers complete their purchases, especially first-time homebuyers, ”Kahn said.

Despite the decline in purchases, the average size of mortgages overall for the week rose to $ 345,900 from $ 335,400, up 3.1%.

The share of applications received under state programs was a smaller share of the total volume for the week. FHA-sponsored loans accounted for 9.5% of all applications, up from 9.8% in the previous week. Veterans Administration-backed applications dropped to 10.3% of the total from 10.8% a week earlier, while USDA loans remained unchanged at 0.5% of total applications.

Interest rates continue to fall, with the 30-year rate being the lowest in several months.
The growth in mortgage activity was in line with the decline in most key interest rates over the week.

  • The average interest rate on 30-year fixed-rate mortgages with a corresponding loan balance of $ 548,250 or less fell six basis points to 3.09%, the lowest level since mid-February. A week ago, the rate was 3.15%.
  • The average contractual interest rate on 30-year large fixed-rate loans (with balances over $ 548,250) fell to 3.16% from 3.2% in the previous week.
  • The average interest rate on 30-year fixed rate mortgages secured by the Federal Housing Administration fell to 3.15%, down two basis points from 3.17% in the previous week.
  • The average interest rate on 15-year fixed rate mortgages fell to 2.48% from 2.52% in the previous week.
  • The 5/1 adjustable rate mortgage posted its only weekly gain, climbing to 3.02% from 2.94%.

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