Mortgage Purchase Applications Hit 9-Month High

Mortgage purchase applications rose 8 percent from the previous week on a seasonally adjusted basis for the period ending on Jan. 19, according to a weekly survey from the Mortgage Bankers Association.

The activity, which was also adjusted to account for Martin Luther King Jr. Day, represented a 3 percent jump from the previous week when not adjusted.

The purchase activity was at its highest level since April, according to Bloomberg.

Purchase activity was down 18 percent from last year, but the increase from the preceding week was made more impressive by the fact that there was a slight uptick in mortgage rates. The contract rate on the average 30-year fixed-rate mortgage with conforming loan balances ($726,200 or less) was 6.78 percent, up from 6.75 percent. Points also increased from 0.62 to 0.63.

Joel Kan, the MBA’s deputy chief economist, said in a statement that “some buyers moved to act early this season,” alluding to the traditional spring homebuying surge.

The FHA share of applications dropped from 14.3 percent to 14.1 percent, while the VA share saw an even greater downturn, falling from 14.2 percent to 13.7 percent.

Not every index tracked by the MBA saw the same momentum as purchases. Homeowners continue to have little incentive to refinance their mortgages if they landed theirs while they were at historically low levels at the pandemic’s onset. The adjusted refinance index dropped 7 percent from the previous week and 8 percent year-over-year. The refinancing share of total activity decreased from 37.5 percent the prior week to 32.7 percent last week.

The average contract interest rate for a 30-year rate with jumbo loan balances increased 8 basis points to 6.94 percent, while the average contract interest rate for a 15-year fixed-rate mortgage jumped from 6.24 percent to 6.31 percent.