Mortgage applications saw a 3.7% increase in the week ending January 19, 2024, compared to the previous week, according to the Mortgage Banker's Association. This data accounts for the Martin Luther King Jr. holiday.
The Market Composite Index, a key indicator of mortgage loan application volume, also exhibited a 3.7% increase on a seasonally adjusted basis compared to the previous week. However, on an unadjusted basis, the index showed a 4% decrease when compared to the previous week.
When focusing on the holiday-adjusted Refinance Index, it witnessed a 7% decrease from the previous week and was 8% lower than the same period the previous year. On an unadjusted basis, the Refinance Index dropped by 16% compared to the previous week and also exhibited an 8% decrease year-over-year.
In contrast, the seasonally adjusted Purchase Index showed a significant 8% increase from the previous week, indicating increased activity in home purchases. On an unadjusted basis, the Purchase Index displayed a 3% increase compared to the previous week but was 18% lower compared to the same week the previous year.
“Mortgage rates increased slightly last week but, there continues to be an upward trend in purchase activity. Conventional and FHA purchase applications drove most of the increase last week as some buyers moved to act early this season,” MBA’s Vice President and Deputy Chief Economist Joel Kan said. “Refinance applications declined over the week and remained at low levels. There is still little incentive for homeowners to refinance with rates at these levels.”
The data also revealed changes in the distribution of different types of mortgage activity. The refinance share of mortgage activity decreased to 32.7% of total applications from 37.5% in the previous week. Meanwhile, the share of adjustable-rate mortgages (ARMs) increased slightly to 6.3% of total applications.
In terms of government-backed loans, the FHA share of total applications saw a slight decrease to 14.1% from 14.3% the week before. Similarly, the VA share of total applications decreased to 13.7% from 14.2% in the prior week. The USDA share of total applications also declined slightly to 0.4% from 0.5% the previous week.
Finally, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances (up to $726,200) saw a slight increase to 6.78% from 6.75%. Points increased to 0.63 from 0.62 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
For jumbo loans (greater than $726,200), the average contract interest rate for 30-year fixed-rate mortgages increased to 6.94% from 6.86%. Points for jumbo loans increased to 0.46 from 0.42 (including the origination fee) for 80% LTV loans.
