Mortgage refinance applications in the U.S. increased last week, bringing new activity to the highest level since August, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey.
The MBA’s Refinance Index, part of its Weekly Mortgage Applications Survey, showed that refinance activity for the week ending Oct. 2 increased 8 percent from the previous week and was 50 percent higher than the same week one year ago. The refinance share of mortgage activity increased to 65.4 percent of total applications from 63.3 percent the previous week.
Purchase activity went down slightly, as the seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 21 percent higher than the same week one year ago.
“Mortgage rates declined across the board last week – with most falling to record lows – and borrowers responded. The refinance index jumped 8 percent and hit its highest level since mid-August,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement. “Continuing the trend seen in recent months, the purchase market is growing at a strong clip, with activity last week up 21 percent from a year ago. The average loan size increased again to a new record at $371,500, as activity in the higher loan size categories continues to lead growth.”
Kan added that aspects of the purchase market could affect continued growth.
“There are signs that demand is waning at the entry-level portion of the market because of supply and affordability hurdles, as well as the adverse economic impact the pandemic is having on hourly workers and low-and moderate-income households,” Kan said. “As a result, the lower price tiers are seeing slower growth, which is contributing to the rising trend in average loan balances.”
Overall, the Market Composite Index, a measure of mortgage loan application volume, increased 4.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 5 percent compared with the previous week.
The FHA share of total applications decreased to 11 percent from 11.4 percent the week prior. The VA share of total applications increased to 12.2 percent from 11.9 percent the week prior.
