Mortgage applications jumped 1.4% from last week, according to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending September 6, 2024, on the heels of falling mortgage rates and rising refinance volume.
The Market Composite Index, a measure of mortgage loan application volume, increased 1.4% on a seasonally adjusted basis from the week prior. On an unadjusted basis, the Index decreased 10% compared to the previous week.
The Refinance Index continues its upward trajectory, increasing 1% from the previous week and up 106% from the same week last year. Meanwhile, the seasonally adjusted Purchase Index increased 2% from the week prior. The unadjusted Purchase Index fell 10% compared to the previous week and was 3% lower than the same week last year.
MBA Vice President, Deputy Chief Economist Joel Kan believes the catalyst for increasing mortgage applications is the six weeks of consecutive declines in mortgage rates. The 30-year fixed rate fell to 6.29%, the lowest rate since February 2023, he explained, while Treasury yields have been responding to cooling inflation, a slowing job market, and an anticipated rate cut from the Federal Reserve.
“With rates almost a full percentage point lower than a year ago, refinance applications continue to run much higher than last year’s pace,” Kan said. “However, there is still somewhat limited refinance potential as many borrowers still have sub-5 percent rates. It is a positive development that there are homeowners who can benefit from a refinance as rates continue to move lower.”
Refinances Boost Total Transactions
The refinance share of mortgage activity increased to 46.7% of total applications from 46.4% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.4% of total applications.
“Purchase applications increased over the week and are edging closer to last year’s levels. Despite the drop in rates, affordability challenges and other factors such as limited inventory might still be hindering purchase decisions,” Kan added.
The FHA share of total applications increased to 14.7% from 14.6% the week prior. The VA share of total applications decreased to 16.4% from 16.7% the week prior. The USDA share of total applications remained unchanged at 0.4% from the week prior.
Average Contract Rates Fall Across All Loan Types
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) fell to 6.29% from 6.43%, with points decreasing to 0.55 from 0.56 (including the origination fee).
For 30-year fixed-rate mortgages with jumbo loan balances (greater than $766,550) the average contract interest rate decreased to 6.56% from 6.73%, with points decreasing to 0.33 from 0.35 (including the origination fee).
For 30-year fixed-rate mortgages backed by the FHA the average contract interest rate fell to 6.24% from 6.30%, with points decreasing to 0.76 from 0.80 (including the origination fee).
For 15-year fixed-rate mortgages the average contract interest rate decreased to 5.71% from 5.98%t, with points increasing to 0.73 from 0.64 (including the origination fee), while for 5/1 ARMs the rate decreased to 5.85% from 5.98%, with points decreasing to 0.29 from 0.76 (including the origination fee).
