Mortgage applications rise to the highest level since July 2022
Mortgage applications are now at their highest level in more than two years, after rising 11% in the week ending September 20, according to the latest weekly applications survey from the Association of Mortgage Bankers (MBA).
The 11% increase in the MBA’s overall application index – pushing the index to its highest point since July 2022 – was fueled primarily by refinancings, which rose 20% from the previous week and are now 175% higher compared to the same week in 2023. Applications for purchase loans showed a more modest increase of 0.4% week over week and 2% year over year.
The decline in mortgage rates appears to be having a positive impact on borrower demand, as MBA data shows that the 30-year fixed rate fell for the eighth week in a row, reaching 6.13%. And the rate for Federal Housing Administration (FHA) loans fell to 5.99%, “exceeding the psychologically important 6% level,” said Joel Kan, MBA vice president and deputy chief economist.
“As a result of lower interest rates, week-on-week gains for both conventional and government refinancing applications have risen sharply,” Kan said in a statement. “The refinancing share of applications now stands at 55.7%, and while the level of refinancing activity is still modest compared to previous refinancing waves, they now account for the majority of applications given the seasonal slowdown in purchasing activity .”
Rising house prices are reflected in larger loan sizes. The MBA reported that the average loan size for all purchase and refinance applications grew to $413,100, the highest figure in the history of the MBA data set.
The FHA share of all applications fell to 15%, a decline of 20 basis points (bps) from the previous week. Ask for The U.S. Department of Veterans Affairs (VA) loans rose significantly, rising 250 basis points to a share of 18.3%. Adjustable rate mortgages (ARMs) accounted for 5.9% of all applications, the same as the previous week.
The average contract rate for 30-year fixed-rate mortgages with a conforming loan balance of $766,550 or less fell 2 basis points to 6.13%. Credit points, including the origination fee, increased to an average of 0.57 for mortgages with a loan-to-value ratio of 80%.
The average rate for 30-year fixed jumbo loans with balances above $766,550 rose from 6.41% to 6.47% over the week, although points fell to an average of 0.5. Rates for 15-year fixed loans rose to 5.47%, while rates for 5/1 ARMs rose to 5.76%.
The MBA’s research covers more than 75% of all U.S. residential mortgage applications through commercial banks, independent mortgage banks and thrift stores. The index was benchmarked at 100 in March 1990.
