ARM share climbs to highest level since 2022
Mortgage application activity in the US rose sharply in the first full week of August, led by a jump in refinancing as interest rates on some loan types edged lower, according to the Mortgage Bankers Association (MBA).
The MBA’s Market Composite Index, which tracks total mortgage loan application volume, climbed 10.9% on a seasonally adjusted basis for the week ending August 8.
On an unadjusted basis, the index rose 10% from the prior week. Refinancing activity accounted for most of the increase, with the Refinance Index up 23% from the previous week and 8% above the same week a year earlier. Purchase applications inched up 1% from the week before and were 17% higher than a year ago.
MBA vice president and deputy chief economist Joel Kan said the average rate for 30-year fixed-rate mortgages fell to 6.67%, prompting the highest weekly refinance volume since April. Larger loan balances were a factor, with the average refinance loan size increasing to $366,400. Applications for conventional and VA refinances made up much of the gain.
Adjustable-rate mortgage (ARM) activity also picked up, with applications increasing 25% to the highest level since 2022. ARMs represented 9.6% of total applications for the week. Kan noted that the relative cost advantage of ARMs compared to fixed-rate loans encouraged some borrowers to choose that option.
The share of FHA applications edged down to 18.4% from 18.5% the week prior. VA applications rose to 14.2% from 13.3%, while USDA applications held at 0.5%.
Average contract interest rates showed mixed movements. Rates for 30-year fixed-rate conforming loans ($806,500 or less) declined from 6.77% to 6.67%, with points rising to 0.64 from 0.59. Jumbo 30-year fixed loans (greater than $806,500) saw rates rise from 6.65% to 6.70%, with points decreasing to 0.56 from 0.59.
For FHA-backed 30-year fixed loans, rates slipped to 6.40% from 6.47%, with points decreasing to 0.77 from 0.81. The average 15-year fixed rate declined to 5.93% from 6.03%, and the 5/1 ARM rate fell to 5.80% from 6.06%, with points increasing to 0.67 from 0.49.
MBA’s weekly survey, conducted since 1990, compiles data from mortgage bankers, commercial banks, and credit unions, covering retail and consumer direct mortgage applications nationwide.
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