Buy and refinance requests both posted weekly gains and rebounded from recent declines, according to the Mortgage Bankers Association.
The MBA's Market Composite Index – a measure of loan application volume determined by a weekly survey of MBA members – rose by a seasonally adjusted 2.8% in the period ended August 6. The unadjusted index also showed a 3% increase. The number of applications was seasonally adjusted by 11.5% below the level of the previous week.
After purchasing volume had fallen to its lowest level in over a year for two consecutive weeks, purchasing volume rose again, with the seasonally adjusted index increasing by 2%. The unadjusted index was up 1% but was down 18% year over year. An increase in government-sponsored mortgage applications, such as those guaranteed by the Federal Housing Authority, has driven the purchase index higher, according to Joel Kan, the MBA's vice president of economic and industry forecasting.
"Given the low sales inventory that is keeping home appreciation at record highs in many markets, the surge in FHA purchase requests may be a sign that more first-time buyers are finding options to buy despite the high prices," he said in a press statement.
After a week's decline, the refinancing index also picked up again and climbed 3%, but remained 8% below the previous year's value. The total number of refinancing requests for the week was 68% of the total, a slightly higher proportion than the previous week's 67.6%.
"Homeowners continue to react to lower interest rates, with refinancing activity climbing to its highest level since February 2021," added Kan.
The proportion of variable rate mortgage loan applications fell two basis points week-on-week to 3.2% from 3.4% the previous week.
Average loan amounts show only minor changes
The average mortgage size has barely changed from a week ago. Refinance mortgages averaged $ 321,900 for the second straight week, while the average purchase loan size rose just 0.1% to $ 394,600 from $ 394,100. The average total loan amount for all mortgages decreased from $ 345,300 a week earlier to $ 345,200.
Although refinancing accounted for 68% of the application portion, the dollar amount on these applications was only 63.4% of the total, which Kan. an indication of the significantly higher credit volume in the case of purchases. CoreLogic's home price index shows little sign of home price cooling amid the hottest housing market in decades.
Despite the increase in the number of purchase applications submitted through government-sponsored programs, the proportion of government-secured mortgages fell slightly on a weekly basis. FHA sponsored loans accounted for 8.9% compared to 9% the previous week. Veterans Administration-sponsored mortgages decreased to 9.6% of total volume, down from 9.9% a week earlier, and the percentage of applications sponsored by the U.S. Department of Agriculture remained unchanged at 0.5%.
30-year compliant rate is rising again
After the release of strong digits, interest rates rose slightly towards the end of the week but continued to favor borrowers.
The average contract rate on 30-year fixed-rate mortgages with corresponding loan balances of $ 548,250 or less rose to 2.99%, two basis points more than 2.97% the previous week. The average contract rate on 30-year jumbo fixed rate loans with more than $ 548,250 in credit also rose to 3.15% from 3.12% in the previous week, and rates decreased from 3.08% a week earlier 3.06%. After falling to record lows for two consecutive weeks on 15-year fixed-rate mortgages, the contract rate rose two basis points from 2.33% a week earlier to 2.35%. The 5/1 average of the floating rate fell over 40 basis points for the week, declining from 2.93% to 2.52%.