Mortgage application activity was on the rise thanks mainly to an upswing in refinance inquiries fueled by declining mortgage rates, according to data from the Mortgage Bankers Association (MBA) for the week ending Jan. 16.
The Market Composite Index, the MBA’s measure of mortgage loan application volume, increased 14.1% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the index increased 17% compared with the previous week.
The seasonally adjusted Purchase Index increased 5% from one week earlier while the unadjusted index increased 12% – the latter was 18% higher than the same week one year ago. The Refinance Index shot up by 20% from the previous week and was 183% than the same week one year ago, while the refinance share of mortgage activity increased to 61.9% of total applications from 60.2% the previous week.
Among the federal programs, the FHA share of total applications decreased to 15.9% from 19.2% the week prior while the VA share of total applications inched up to 16.2% from 16.1% and the USDA share of total applications remained unchanged at 0.4%.
Joel Kan, MBA’s vice president and deputy chief economist, observed that lower mortgage rates “prompted greater refinance activity from conventional and VA refinance borrowers, with increases of 29% and 26%, respectively. Refinance applications accounted for more than 60% of applications, and the average loan size also moved higher.”
