As rates slipped, the volume of Americans seeking mortgages rose — and the average size of loans hit a new high.
Applications for mortgages to purchase homes increased 3 percent, seasonally adjusted, compared to the final week of August, according to the Mortgage Bankers Association weekly survey.
The MBA metric, known as purchase index, is up 40 percent year-over-year, according to the association’s Joel Kan, head of industry forecasting, though he noted the timing of Labor Day skews the comparison. The increase marks the 16th week running of annual growth for the purchase index.
Kan noted that a drop in rates drove a rebound in refinancing activity last week. MBA’s refinance index increased an adjusted 3 percent week over week, though the volume of activity was up 60 percent compared to the same period in 2019.
It comes a week after the Federal Reserve approved a change in setting interest rates, which it will now allow inflation to rise past 2 percent. The announcement signals a low-rate environment for borrowers is likely here to stay.
Kan also highlighted the new high for average loan size, which last week increased to $368,600 from $326,200 the week before. In July, the median price of a home exceeded $300,000 for the first time.
The rates for a 30-year, fixed-rate mortgage fell by 1 percentage point to 3.07 percent from 3.08 percent the prior week. Jumbo rates dropped to 3.40 percent from 3.41 percent.
MBA’s overall index increased an adjusted 2.9 percent compared to the volume a week earlier. Its weekly survey covers 75 percent of the residential mortgage market and has been conducted since 1990.