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The Mortgage Bankers Association's latest Weekly Mortgage Application Survey reported a 4.6% increase in mortgage applications on an adjusted basis for the week ending Oct. 2, 2020. On an unadjusted basis, mortgage applications increased by 5%.
The report also showed that the Refinance Index increased by 8% from the previous week and was a stunning 50% higher than the same week a year ago. The seasonally adjusted purchase index did not follow the same pattern and dipped by 2%.
"Mortgage rates declined across the board last week - with most falling to record lows - and borrowers responded. The refinance index jumped 8 percent and hit its highest level since mid-August," said Joel Kan, MBA's associate vice president of Economic and Industry Forecasting. "Continuing the trend seen in recent months, the purchase market is growing at a strong clip, with activity last week up 21 percent from a year ago. The average loan size increased again to a new record at $371,500, as activity in the higher loan size categories continues to lead growth."
"There are signs that demand is waning at the entry-level portion of the market because of supply and affordability hurdles, as well as the adverse economic impact the pandemic is having on hourly workers and low-and moderate-income households. As a result, the lower price tiers are seeing slower growth, which is contributing to the rising trend in average loan balances."
Meanwhile, the refinance share of mortgage activity increased to 65.4% of total applications from 63.3% the previous week. The adjustable-rate mortgage share of activity remained stagnant at 2.2%, the FHA share decreased to 11% from 11.4% the previous week, the VA share increased to 12.2% from 11.9% and the USDA share remained stagnant at 0.5%.
"The latest results of the Mortgage Bankers Association weekly applications survey reinforce the findings from Roostify’s internal volume data," commented Chris Boyle, president of home lending at Roostify. Record-low mortgage rates from last week are buoying the slight gain in mortgage applications. Our partners continue to see surges in loan demand both online and in their branches, as they continue to expand their digital engagement options."