Last week was a good one for refinance applications

by Steve Randall30 Jan 2020

Lower mortgage rates last week boosted activity for both refinance and purchase mortgage applications.

The Mortgage Bankers Association’s weekly index shows an increase of 7.2% in mortgage applications for the week ending January 24, 2020, compared to the previous week (including an adjustment for the Martin Luther King Jr. holiday). Unadjusted, it was down 1%.

"Mortgage applications continued their strong start to the year, as borrowers acted on the drop in mortgage rates last week. Rates were driven lower by investors' increased concern about the economic impact from China's coronavirus outbreak, in addition to existing concerns over trade and other geopolitical risks," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "With the 30-year fixed rate at its lowest level since November 2016, refinances jumped 7.5%. Purchase applications grew 2% and were 17% higher than the same week last year. Thanks to low rates and the healthy job market, purchase activity continues to run stronger than in 2019."  

Rates are set to remain lower following the Fed’s decision Wednesday to maintain interest rates at their current level.

The stats

  • The refinance share of mortgage activity decreased to 60.4% of total applications from 61.6% the previous week.
  • The adjustable-rate mortgage (ARM) share of activity increased to 4.7% of total applications.
  • The FHA share of total applications decreased to 10.7% from 11.3% the week prior.
  • The VA share of total applications decreased to 11.7% from 13.8% the week prior.
  • The USDA share of total applications remained unchanged from 0.5% the week prior.

Average contract rates
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.81% from 3.87%, with points increasing to 0.28 from 0.27 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) decreased to 3.78% from 3.87%, with points decreasing to 0.2 from 0.21 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.82% from 3.78%, with points increasing to 0.27 from 0.25 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.24% from 3.25%, with points remaining unchanged at 0.22 (including the origination fee) for 80% LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.15% from 3.29%, with points decreasing to 0.12 from 0.25 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week. 


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