Mortgage applications took a healthy upturn thanks to a surge in refinancing, according to data from the Mortgage Bankers Association (MBA) covering the week ending Dec. 6.
The Market Composite Index, the MBA’s measure of mortgage loan application volume, increased 5.4% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the index soared by 50% compared with the previous week.
The seasonally adjusted Purchase Index dipped by 4% from one week earlier while the unadjusted index jumped 30% compared with the previous week and was 4% higher than the same week one year ago. The Refinance Index enjoyed a 27% bump-up from the previous week and was 42% higher than the same week one year ago, while the refinance share of mortgage activity increased to 46.8% of total applications from 38.7% the previous week.
Among the federal programs, the FHA share of total applications increased to 16.5% from 16% the week prior while the VA share of total applications increased to 16.3% from 13.6% and the USDA share of total applications remained unchanged at 0.4%.
Joel Kan, MBA’s vice president and deputy chief economist, observed, “Applications increased 5%, driven by a 27% surge in refinance activity, as borrowers with higher rates acted on the chance to lower their payments. VA refinance applications were up 85% from the previous week, matching some of the larger swings in VA activity reported in recent months. Purchase applications remained relatively strong and have shown annual gains in all but one week over the past three months. In addition to lower rates, purchase activity continues to be supported by sustained housing demand and inventory that continues to grow gradually in many markets.”
Separately, the MBAI’s Mortgage Credit Availability Index (MCAI) fell by 3.3% in November to 95.9 in November; the index was benchmarked to 100 in March 2012. The Conventional MCAI decreased 2.7%, while the Government MCAI decreased by 3.9%. Of the component indices of the Conventional MCAI, the Jumbo MCAI was down by 0.9% and the Conforming MCAI tumbled by 6.6%.
“Credit availability tightened considerably in November, pushing the index to the lowest level in five months,” said Kan. “Part of the decline was attributable to investors pulling back on high LTV and low credit score programs for both fixed and ARM loans, as well as further exits from the broker channel in an originations market that is still challenging for many lenders. The most notable impact was on the government index, which decreased to its lowest since December 2012.”
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