Index climbs to a new high
US mortgage applications inched up 1.6% for the week ending August 20 following a slight drop in mortgage rates, according to the Mortgage Bankers Association.
“Treasury yields fell last week, as investors continue to anxiously monitor if the rise in COVID-19 cases in several states starts to dampen economic activity,” said Joel Kan, AVP of economic and industry forecasting at MBA. “Mortgage rates slightly declined as a result, with the 30-year fixed-rate decreasing for the first time in three weeks.”
Thanks to low rates, refinance applications grew 1% week over week, while purchase applications climbed 3% on a seasonally adjusted basis.
“Lower rates led to an increase in refinance applications, with government loan applications jumping 10% to the highest level since May 2021,” Kan added. “Purchase applications for both conventional and government loans also increased. The purchase index was at its highest level since early July, despite continuing to lag 2020’s pace.”
The refi share of mortgage activity held steady at 67.3% from the week prior. The FHA share of total applications increased from 9.4% to 11%, while the VA share dropped three basis points to 10%, and the USDA share remained unchanged from 0.4% the previous week.
Additionally, Kan noted some easing in average loan sizes, which may be a sign that “more first-time buyers looking for lower-priced homes are being helped by the recent uptick in for-sale inventory for both newly built homes and existing homes.”
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased three basis points to 3.03%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) was down six basis points to 3.13%.