On an unadjusted basis, the composite index increased by 119% week-over-week. The seasonally adjusted purchase index increased 24%, compared to the week ended January 2. The unadjusted purchase index jumped by 83% for the week and is now 2% higher year-over-year.
The MBA’s chief economist explained:
Mortgage rates reached their lowest level since May of 2013, and refinance application volume soared, more than doubling on an unadjusted basis, and up 66 percent after adjusting for the fact that the previous week included the New Year’s holiday. Conventional refinance volume increased to a greater extent than government refinance volume. Applications for larger refinance loans increased more than 4 times relative to the previous week.
In addition to the drop in rates, and news of improvement in the job market, there was additional positive news for prospective homebuyers with evidence that credit availability has increased somewhat, and with FHA’s announcement of a decrease in their mortgage insurance premiums. Purchase application volume increased by almost 24 percent, with stronger growth for conventional applications than for government loans.
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Adjustable rate mortgage loans accounted for 5.9% of all applications, up from 4.9% in the prior week.
The MBA’s refinance index increased 66% week-over-week, and the percentage of all new applications that were seeking refinancing rose from 65% in the prior week to 71%.
The average mortgage loan rate for a conforming 30-year fixed-rate mortgage decreased from 4.01% to 3.89%, the lowest rate since May 2013. The rate for a jumbo 30-year fixed-rate mortgage decreased from 3.99% to 3.88%, also the lowest since May 2013. The average interest rate for a 15-year fixed-rate mortgage decreased from 3.24% to 3.16%, again the lowest since May 2013.
The contract interest rate for a 5/1 adjustable rate mortgage loan decreased from 3.19% to 2.94%, the lowest since October 2014. Rates on a 30-year FHA-backed fixed rate loan fell from 3.81% to 3.71%, the lowest rate since May 2013.
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