Mortgage Applications in U.S. Jump 21 Percent in Early January

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According to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending January 8, 2016, mortgage applications increased 21.3 percent from one week earlier. The previous week's results included an adjustment for the New Year's holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 21.3 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 76 percent compared with the previous week.

The Refinance Index increased 24 percent from the previous week.  The seasonally adjusted Purchase Index increased 18 percent from one week earlier. The unadjusted Purchase Index increased 74 percent compared with the previous week and was 19 percent higher than the same week one year ago.

"MBA's purchase mortgage application index reached its second highest level since May 2010 on a seasonally adjusted basis last week, second only to the week prior to the implementation of the Know Before You Owe rules," said Lynn Fisher, MBA's Vice President of Research and Economics.

"Bolstered by strong fourth quarter growth in jobs and continuing low rates, the results are similar to levels we saw in early December, suggesting that the purchase market's strong finish to 2015 may be continuing.  While refinances also increased on a holiday-adjusted basis, refinance activity was down 38 percent relative to a year ago when rates dove below 4 percent," Fisher continued.

The refinance share of mortgage activity increased to 55.8 percent of total applications from 55.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.1 percent of total applications.

The FHA share of total applications decreased to 14.4 percent from 14.6 percent the week prior. The VA share of total applications decreased to 12.2 percent from 12.9 percent the week prior. The USDA share of total applications increased to 0.8 percent from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.12 percent from 4.20 percent, with points decreasing to 0.38 from  0.42 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.  The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 4.02 percent from 4.09 percent, with points decreasing to 0.30 from 0.35 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.90 percent from 3.95 percent, with points decreasing to 0.34 from 0.41 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.42 percent from 3.47 percent, with points increasing to 0.39 from 0.31 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.14 percent from 3.19 percent, with points increasing to 0.42 from 0.32 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.