Borrowers seeking larger balances drive mortgage application activity
Whether it was for a refinance or a purchase, borrowers that had or were looking for larger loan balances had a significant effect on the week’s activity.
Compared with one year ago, the refi index was 144% higher. The refinance share of mortgage activity increased to 59.5% of total applications from 58% the previous week.
Meanwhile, the seasonally adjusted purchase index decreased 3% from one week earlier. On an unadjusted basis, the purchase index decreased 4% compared with the previous week and was 7% higher than the same week one year ago.
“U.S. Treasury yields once again exhibited some intraweek volatility before declining sharply toward the end of the week. As a result, mortgage rates decreased, with the 30-year fixed rate falling below 4% again,” Joel Kan, the MBA’s associate vice president of economic and industry forecasting, said in a press release.
“In response to the lower rates, refinance applications climbed 2%, as homeowners with larger loan balances helped to keep the average refinance loan size elevated. Amidst persistent supply constraints in the entry-level price range, there’s evidence that high-end homebuyers are more active this fall. The average loan size for purchase applications increased to its highest level since May.”
Adjustable-rate mortgage activity remained unchanged at 5.2% of total applications, while the share of Federal Housing Administration-insured loan applications decreased to 11.8% from 12% the week prior.
The share of applications for Veterans Affairs-guaranteed loans increased to 12% from 11.8% and the U.S. Department of Agriculture/Rural Development share remained unchanged from 0.6% the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased 7 basis points to 3.98%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350), the average contract rate decreased 4 basis points to 3.97%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased 4 basis points to 3.79%. For 15-year fixed-rate mortgages, the average decreased 2 basis to 3.38%. The average contract interest rate for 5/1 ARMs remained unchanged at 3.43%.
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