Mortgage Applications Uptick in Early February

According to the Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ending January 31, 2020, mortgage applications increased 5.0 percent from one week earlier. The previous week's results included an adjustment for the Martin Luther King Jr. holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 5.0 percent on a seasonally adjusted basis from one week earlier to its highest level since May 2013. On an unadjusted basis, the Index increased 20 percent compared with the previous week.

The Refinance Index increased 15 percent from the previous week - its highest level since June 2013 - and was 183 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 10 percent from one week earlier. The unadjusted Purchase Index increased 8 percent compared with the previous week and was 11 percent higher than the same week one year ago.

"The 10-year Treasury yield fell around 20 basis points over the course of last week, driven mainly by growing concerns over a likely slowdown in Chinese economic growth from the spread of the coronavirus. This drove mortgage rates lower, with the 30-year fixed rate decreasing for the fifth time in six weeks to 3.71 percent, its lowest level since October 2016," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Refinance activity jumped as a result, with an increase in the number of applications and a spike in the average loan amount, as homeowners with jumbo loans reacted more resoundingly to lower rates."

Added Kan, "Prospective buyers weren't as responsive to the decline in mortgage rates - likely because of suppressed supply levels. Purchase applications took a step back, but still remained 7.7 percent higher than a year ago."

The refinance share of mortgage activity increased to 64.5 percent of total applications from 60.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.9 percent of total applications.

The FHA share of total applications decreased to 9.6 percent from 10.7 percent the week prior. The VA share of total applications decreased to 10.2 percent from 11.7 percent the week prior. The USDA share of total applications decreased to 0.4 percent from 0.5 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.71 percent from 3.81 percent, with points remaining unchanged at 0.28 (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 $510,400) decreased to 3.70 percent from 3.78 percent, with points decreasing to 0.19 from 0.20 (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 3.80 percent from 3.82 percent, with points decreasing to 0.26 from 0.27 (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 3.19 percent from 3.24 percent, with points increasing to 0.23 from 0.22 (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 increased to 3.23 percent from 3.15 percent, with points increasing to 0.15 from 0.12 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.