Mortgage applications experienced a significant surge, rising by 10.4% from the previous week, as reported by the Mortgage Bankers Association (MBA) in their Weekly Mortgage Applications Survey for the week ending January 12, 2024. This notable increase follows an adjustment made to account for the New Year's holiday in the previous week's results.
The Market Composite Index, indicating mortgage loan application volume, displayed a 10.4% increase on a seasonally adjusted basis from the prior week. On an unadjusted basis, the index witnessed a substantial 26% rise compared to the previous week.
Breaking down the data, the Refinance Index saw an 11% increase from the previous week, marking a 10% improvement compared to the same week one year ago. The Purchase Index, on a seasonally adjusted basis, recorded a 9% increase from the previous week, while the unadjusted Purchase Index surged by 28% compared to the prior week, albeit registering a 20% decrease from the same week the previous year.
Joel Kan, MBA's vice president and deputy chief economist, attributed this surge to declining mortgage rates across all loan types, driven by lower Treasury yields in response to incoming inflation data. The 30-year fixed mortgage rate notably decreased to 6.75%, marking the lowest rate in three weeks.
Despite lagging purchase activity compared to the previous year, Kan expressed cautious optimism that, with continued easing of rates, home purchases might pick up in the coming months. The refinance share of mortgage activity decreased slightly to 37.5% of total applications, while the adjustable-rate mortgage (ARM) share increased to 5.9%.
Various loan types showed changes in market share, with FHA and VA shares decreasing, and USDA share increasing. The survey also provided details on average contract interest rates for different mortgage types, reflecting the dynamic nature of the mortgage market in the reported period.
