Refinance activity jumps while purchase demand stays flat, MBA reports
A drop in long-term mortgage rates to their lowest point since April sparked a 2.7% weekly increase in mortgage applications, according to the Mortgage Bankers Association (MBA).
MBA’s latest survey showed the total mortgage loan application volume rose 2.7% on a seasonally adjusted basis. Unadjusted, the index was up 13% from the previous week, which had been adjusted for the Juneteenth holiday.
The key driver behind the uptick was a decline in rates across all loan types. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) fell to 6.79%, down from 6.88% the prior week.
“Mortgage rates were lower across all loan types last week, with the 30-year fixed rate declining to its lowest level since April at 6.79%,” said MBA deputy chief economist Joel Kan. “This decline prompted an increase in refinance applications, driven by a 10% increase in conventional applications and a 22% increase in VA refinance applications.”
The refinance segment saw the biggest gains. The Refinance Index jumped 7% week-over-week and is now 40% higher than the same week last year. The refinance share of total mortgage activity also rose to 40.1%, up from 38.4% the previous week.
Kan noted that borrowers with larger loan amounts responded more quickly to rate changes, pushing the average loan size for refinance applications up to $313,700, breaking a six-week stretch where the average stayed below $300,000.
Fannie Mae’s Refinance Application-Level Index (RALI) mirrored the MBA data, with refinance dollar volume up 15.8% on the week and up 42.6% year-over-year.
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Purchase activity, on the other hand, was largely unchanged. The seasonally adjusted Purchase Index edged up just 0.1%, while the unadjusted index rose 10% compared to the week prior.
“Purchase activity was essentially flat over the week, as overall uncertainty continues to hold homebuyers out of the market,” Kan said. “However, purchase activity still remains 16 percent higher than last year’s pace.”
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