Refinancing, Purchase Loans Surge as Mortgage Rates Dip

Mortgage Interest Rates Drop

It seems 2020 is starting off strong in the mortgage world. According to the latest data from the Mortgage Bankers Association, mortgage loan applications were up a whopping 30.2% over last week, while mortgage rates hit their lowest point since September.

Refinancing saw the biggest surge, with refinance applications up 43% over the previous week and 109% over one year prior. The uptick is largely due to increasingly lower mortgage rates, which dropped to an almost five-month low this week, hitting an average 3.87% on 30-year, fixed-rate loans.

Purchase vs. Refinance Activity

In total, refinance activity accounted for nearly 63% of all total loan applications this week, up from 58.9% the week before.

Here’s Joel Kan’s, MBA’s associate vice president of economic and industry forecasting, take on the jump: “Refinances increased for both conventional and government loans, as lower rates provided a larger incentive for borrowers to act. It remains to be seen if this strong refinancing pace is sustainable, but even with the robust activity the last two weeks, the level is still below what occurred last fall.

Purchase loans jumped 16% for the week and 8% over the same time last year. It was the highest purchase application volume logged by MBA in more than 10 years.

According to Kan, strong employment numbers are helping spur more purchase activity.

“Homebuyers were active the first week of the year. Purchase activity was 8% higher than a year ago, and the purchase index increased to its highest level since October 2009. Low rates and the solid job market continue to encourage prospective buyers to enter the market.”

Interesting reads

A few interesting reads emerged this week, as it pertains to the mortgage market, housing, and beyond. Want to get the full picture of the market? Check these out on your lunch break and get the latest takes:

This week’s look at mortgage rates

Finally, here’s the important stuff: what rates looked like for the week. According to MBA’s weekly survey — which covers more than 75% of all U.S. mortgage applications, this is what average interest rates currently look like:

  • All 30-year, fixed-rate loans: 3.87%, 0.32 points
  • Jumbo 30-year, fixed-rate loans: 3.83%, 0.24 points
  • FHA 30-year, fixed-rate loans: 3.78%, 0.30 points
  • 15-year, fixed-rate loans: 3.3%, 0.27 points
  • 5/1 ARMs: 3.35%, 0.11 points

Check back here next week for more on the latest interest rates and mortgage news. 

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By Aly Yale / January 17th, 2020 / Categories: / Tags:

Aly Yale

Aly J. Yale is a mortgage and real estate writer based in Houston. Connect with her at AlyJYale.com or on Twitter at @AlyJwriter.