Tumbling interest rates had more borrowers initiating the refinance process, and the latest market conditions could boost refinances further.
The Market Composite Index moved up 9 percent in the week that ended on Feb. 5 compared to its level as of one week previous.
The index, which reflects the
number of new applications that were submitted for home loans, was adjusted to factor in seasonal variations.
Without any seasonal adjustments, the index was up 12 percent, according to the Mortgage Bankers Association — which included the index as part of its
Weekly Mortgage Applications Survey.
MBA reported that refinance applications shot up a seasonally adjusted 16 percent from the last report. At the same time, refinance share widened to 61.2 percent from 59.2 percent in the week ended Feb. 3.
The U.S. Mortgage Market Index from OpenClose and Mortgage Daily, which reflects activity further along in the mortgage process based on rate locks, showed that refinance activity soared 45 percent in the week ended Feb. 4 from a week earlier.
During the week covered by MBA’s survey, the 10-year Treasury yield averaged 1.91 percent, according to Treasury Department data. The 10-year yield had plunged to 1.73 percent as of early Wednesday, suggesting that fixed rates on home loans have fallen around another18 basis points since MBA conducted its survey. The steep decline could drive refinance activity up even further.
Applications for loans to finance home purchases inched up less than 1 percent on a week-over-week basis. But without seasonal adjustments, purchase applications increased 7 percent from a week earlier and 25 percent from a year earlier.
The report indicated that 6.4 percent of applications were for adjustable-rate mortgages.
ARM share widened from 5.9 percent in the last report.
MBA said that applications for Federal Housing Administration-insured loans accounted for 12.3 percent of overall activity. FHA share was down from 12.9 percent seven days earlier.
Another 11.1 percent of the latest activity was for mortgages guaranteed by the Department of Veterans Affairs. VA share was no different than in the last survey.
The jumbo-conforming spread was a negative 15 basis points. The spread widened from the prior week, when jumbo rates were 13 BPS less than conforming rates.
