Mortgage Applications in U.S. Rebound in Early 2019

According to the Mortgage Bankers Association's latest Mortgage Applications Survey for the week ending January 4, 2019, Mortgage applications increased 23.5 percent from one week earlier. This week's results include an adjustment for the New Year's Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 23.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 68 percent compared with the previous week.

The Refinance Index increased 35 percent from the previous week. The seasonally adjusted Purchase Index increased 17 percent from one week earlier. The unadjusted Purchase Index increased 59 percent compared with the previous week and was 4 percent higher than the same week one year ago.

"Mortgage rates fell across the board last week and applications rebounded sharply, after what was a slower than usual holiday period. The 30-year fixed-rate mortgage declined 10 basis points to 4.74 percent, the lowest since April 2018, and other loan types saw rate decreases of between 9 and 20 basis points," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "This drop in rates spurred a flurry of refinance activity - particularly for borrowers with larger loans - and pushed the average loan size on refinance applications to the highest in the survey (at $339,800). The surge in refinance activity also brought the refinance index to its highest level since last July."

Added Kan, "Purchase applications had their strongest week in a month, finishing over four percent higher than a year ago, as both conventional and government purchase activity bounced back with solid gains after a sluggish holiday season."

The refinance share of mortgage activity increased to its highest level since February 2018, 45.8 percent of total applications, from 42.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 8.4 percent of total applications. The average loan size for refinance applications reached a survey high at $339,800.

The FHA share of total applications increased to 10.3 percent from 10.0 percent the week prior. The VA share of total applications increased to its highest level since March 2017, 11.6 percent, from 11.0 percent the week prior. The USDA share of total applications remained unchanged at 0.6 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to its lowest level since April 2018, 4.74 percent, from 4.84 percent, with points increasing to 0.47 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 $484,350) decreased to its lowest level since February 2018, 4.52 percent, from 4.72 percent, with points decreasing to 0.28 from 0.30 (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 its lowest level since April 2018, 4.70 percent, from 4.86 percent, with points decreasing to 0.47 from 0.54 (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 its lowest level since April 2018, 4.16 percent, from 4.25 percent, with points decreasing to 0.35 from 0.60 (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 its lowest level since August 2018, 4.05 percent, from 4.16 percent, with points decreasing to 0.32 from 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.