Unsurprising Surge in Refi Demand Pushes Mortgage Apps Past 3 Year High

Mortgage applications continued to ride the waves from last week's dip in rates, extending the surge that followed early-January rate volatility. The Mortgage Bankers Association (MBA) reported that applications rose 14.1% for the week ending January 16, adding to the prior week’s sharp increase. Refinance demand again led the way. The Refinance Index climbed 20% from the previous week and was 183% higher than the same week one year ago, marking the strongest weekly pace since September. The magnitude of the increase underscores the widely publicized (but oh so temporary) news that intraday 30yr fixed rates dipped just below 6% for the first time in years. “Mortgage rates declined further last week, driving another big week for refinance applications,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “These movements prompted greater refinance activity from conventional and VA borrowers, with refinance applications accounting for more than 60 percent of total volume.” The rate rally was swift enough to spill over to purchase demand--a tall order in the world of mortgage apps. The Purchase Index rose 5% week-over-week, while unadjusted purchase applications increased 12% and were 18% higher than the same week one year ago. The refinance share of total applications increased to 61.9% from 60.2% the prior week. ARM share edged up to 7.1% . FHA share fell to 15.9% from 19.2%, while VA share increased slightly to 16.2%. USDA share was unchanged at 0.4%.