Mortgage application activity took a substantial increase for the week ending Aug. 8 thanks to an uptick in refinance inquiries, according to data from the Mortgage Bankers Association (MBA).
The Market Composite Index, the MBA’s measure of mortgage loan application volume, increased 10.9% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the index was up by 10%.
Both the seasonally adjusted and unadjusted Purchase Index increased 1 percent from one week earlier, while the latter was also 17% higher than the same week one year ago. The Refinance Index increased 23% from the previous week and was 8% higher than the same week one year ago, while the refinance share of mortgage activity rose to 46.5% of total applications from 41.5% the previous week.
Among the federal programs, the FHA share of total applications dipped to 18.4% from 18.5% the week prior while the VA share of total applications increased to 14.2% from 13.3% and the USDA share of total applications remained unchanged at 0.5%.
Joel Kan, MBA’s vice president and deputy chief economist, observed, “Refinances accounted for 46.5% of applications and as seen in other recent refinance bursts, the average loan size grew significantly to $366,400. Borrowers with larger loan sizes continue to be more sensitive to rate movements.”
Kan also noted that adjustable-rate mortgages “increased 25% to their highest level since 2022, and the ARM share of all applications was almost 10%. However, lower rates were not enough to entice more homebuyers back into the market, as purchase applications were only up around one percent over the week, although still stronger than last year’s pace.”
Separately, the MBA released the latest data from its Mortgage Credit Availability Index (MCAI), which inched up by 0.2% to 103.9 in July; the index was benchmarked to 100 in March 2012.
The Conventional MCAI increased 0.5%, while the Government MCAI decreased by 0.2%. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 0.9%, and the Conforming MCAI fell by 0.5%.
“Credit availability edged slightly higher in July, driven by increased availability of ARM loans,” said Kan. “This development was consistent with a steeper yield curve and the jumbo-conforming spread back in negative territory. The average jumbo rate was around 8 basis points lower than the average conforming rate in July. Additionally, data from a separate survey showed that ARMs loan applications have picked up in recent months, although activity is still muted compared to historical averages. Credit availability of conforming loans declined slightly over the month, mostly due to a pullback in renovation loans.”
