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The Mortgage Bankers Association's Weekly Mortgage Application Survey reported a 16.7% increase in mortgage applications for the week ending Jan. 8, 2021, on a seasonally adjusted basis.
Additionally, the Refinance Index increased by 20% from the previous week and was 93% higher than the same week in 2020. The seasonally adjusted Purchase Index increased by 8% from the previous week.
"Booming refinance activity in the first full week of 2021 caused mortgage applications to surge to their highest level since March 2020, despite most mortgage rates in the survey rising last week. The expectation of additional fiscal stimulus from the incoming administration, and the rollout of vaccines improving the outlook, drove Treasury yields and rates higher. The 30-year fixed mortgage rate climbed two basis points to 2.88%, but reversing the trend, the 15-year fixed-rate ticked down to 2.39% - a record low," said Joel Kan, the MBA's associate vice president of Economic and Industry Forecasting. "Even with the rise in mortgage rates, refinancing did not slow to begin the year, with the index hitting its highest level since last March. Both conventional and government refinance applications increased, with applications for government loans having their strongest week since June 2012."
"Sustained housing demand continued to support purchase growth, with activity up nearly 10% from a year ago. The lower average loan balance observed was partly due to a 9.2% increase in FHA applications, which is a positive sign of more lower-income and first-time buyers returning to the market," added Kan.
The refinance share of mortgage activity now sits at 74.8%, up from 73.5% the previous week. The adjustable-rate mortgage share of activity decreased to 1.6% of total applications, according to the report.
Meanwhile, the FHA share of total applications decreased to 9.6%, the VA share increased to 15.8% and the USDA share remained stagnant at 0.4%.