Mortgage Apps Surge After Holiday Slump

Mortgage Weekly Update

The holiday slump is definitely over. According to the latest survey from the Mortgage Bankers Association, mortgage activity jumped nearly 17% last week. 

Total applications were up 16.7% for the week ending January 8, with refinances jumping a whopping 20%. Purchase loan applications increased 8% from the week prior. The increases come after a much-expected downturn during the holidays.

Over the year, refinancing activity is now 93% higher than a year ago and accounts for nearly three-quarters of all loan applications. Both conventional and government refinances increased for the week.

According to Joel Kan, MBA’s associate vice president of economic and industry forecasting, the bump came despite rising rates, which clocked in at 2.88% — up from 2.86% the week ending January 1.

“Booming refinance activity in the first full week of 2021 caused mortgage applications to surge to their highest level since March 2020, despite most mortgage rates in the survey rising last week,” Kan said. “The expectation of additional fiscal stimulus from the incoming administration, and the rollout of vaccines improving the outlook, drove Treasury yields and rates higher.”

More in Mortgage and Housing News

  • According to MBA, mortgage loans were harder to come by in December. The groups’ Mortgage Credit Availability Index decreased by 0.1% last month, indicating a tightening of credit standards. Conventional and conforming loans saw the most tightening.
  • The share of mortgage loans in forbearance dropped last week, slipping to 5.46% of all mortgages, according to MBA. About 2.7 million homeowners are still on forbearance plans.
  • Confidence in the housing market fell for the second month in a row, according to Fannie Mae’s latest Home Purchase Sentiment Index. According to the results, 52% of consumers say it’s now a good time to buy a house — down 9% for the month. Just half say it’s a good time to sell, a decrease of 18% over the same time period. Over 40% also believe home prices will go up in the next 12 months.

This week in mortgage rates

Mortgage rates fluctuated on all loan products this week, but only slightly. Most remain around record lows.

Here’s how rates looked for each loan type:

Make sure to check back here next week for the latest news on interest rates.

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