Mortgage Applications Spike 8 Percent in Late January

According to the Mortgage Bankers Association's latest Weekly Mortgage Applications Survey for the week ending January 29, 2021, U.S. mortgage applications increased 8.1 percent from one week earlier.

The Market Composite Index, a measure of mortgage loan application volume, increased 8.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 10 percent compared with the previous week.

The Refinance Index increased 11 percent from the previous week and was 59 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 0.1 percent from one week earlier. The unadjusted Purchase Index increased 8 percent compared with the previous week and was 16 percent higher than the same week one year ago.

"After increasing for three consecutive weeks, the 30-year fixed mortgage rate dropped 3 basis points to 2.92 percent. The one-week reversal in the recent upswing in rates drove an increase in both conventional and government refinance activity, as borrowers continue to lock in these historically low rates. MBA's refinance index hit its highest level since March 2020 and jumped 60 percent year-over-year," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting.

"Purchase activity was unchanged last week, with a 1 percent increase in conventional applications offset by a 3 percent decline in government applications. Average purchase loan amounts in early 2021 continue to rise across all loan types, driven by a strong pace of home sales, tight housing inventory and high home-price growth. Conventional, FHA and VA purchase loan sizes all set new survey records last week."

The refinance share of mortgage activity increased to 71.4 percent of total applications from 70.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 2.2 percent of total applications.

The FHA share of total applications decreased to 9.1 percent from 9.4 percent the week prior. The VA share of total applications decreased to 12.1 percent from 12.4 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 2.92 percent from 2.95 percent, with points remaining unchanged at 0.32 (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 3.12 percent from 3.17 percent, with points increasing to 0.32 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 30-year fixed-rate mortgages backed by the FHA increased to 2.94 percent from 2.88 percent, with points decreasing to 0.29 from 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 2.44 percent from 2.43 percent, with points remaining unchanged at 0.32 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs increased to 2.88 percent from 2.60 percent, with points increasing to 0.46 from 0.38 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.