Applications rebound as borrowers scurry to refinance before rates soar higher

Both elements pick up after weeks of decline

Applications rebound as borrowers scurry to refinance before rates soar higher

The refinance market posted a much-needed rebound as borrowers hurry to secure a loan before rates climb even higher.

The Mortgage Bankers Association reported a 12% jump in overall mortgage applications for the week ending January 28. The week prior, application volume fell 7.1% due to rising interest rates.

“Most mortgage rates in MBA’s survey continued to rise, with the 30-year fixed rate reaching its highest level since March 2020 at 3.78%,” said Joel Kan, AVP of economic and industry forecasting at MBA. “There has likely been some recent volatility in application counts due to holiday-impacted weeks.”

Despite the surge in rates, refinance applications swelled 18%, largely driven by a 22% increase in conventional applications. As a result, the refi share of mortgage activity was up by 2.5% week over week to 57.3% of total applications.

Purchase loan applications also experienced a boost, up by 4% on a seasonally adjusted basis and 12% on an unadjusted basis.

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“Purchase applications also increased in the final full week of January but remained 7% lower than a year ago,” Kan said. “The average purchase loan size hit a new survey high once again at $441,100. Stubbornly low inventory levels and swift home-price growth continue to push average loan sizes higher.”    

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances and loans backed by the FHA increased to 3.59% and 3.86%, respectively. The average contract interest rate for 15-year fixed-rate mortgages increased to 3.01%.