Following the notable decrease in the average 30-year-fixed mortgage rate this past week, mortgage application volume increased again this week, but it was refinance applications for the win, surging to a 5-month high.
According to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association (MBA) for the week ending Aug. 8, the Market Composite Index (a measure of mortgage loan application volume) increased 10.9% from the previous week’s 3.1% increase. On an unadjusted basis, the Index increased 10% compared with the previous week.
The Refinance Index increased 23% from the previous week and was 8% higher than the same week one year ago. The seasonally adjusted Purchase Index increased 1% from one week earlier. The unadjusted Purchase Index increased 1% compared with the previous week and was 17% higher than the same week one year ago.
“The 30-year fixed mortgage rate declined to 6.67% last week, which spurred the strongest week for refinance activity since April. Borrowers responded favorably, as refinance applications increased 23%, driven mostly by conventional and VA applications,” said Joel Kan, MBA’s vice president and deputy chief economist. “Refinances accounted for 46.5% of applications and as seen in other recent refinance bursts, the average loan size grew significantly to $366,400. Borrowers with larger loan sizes continue to be more sensitive to rate movements.”
The previous week’s refinance share of mortgage activity showed an increase of 41.5% over the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 9.6% of total applications, according to this week’s MBA data.
Kan also commented on an increase in adjustable rate mortgages due to more attractive rates. “Given the relative attractiveness of ARM rates compared to fixed rate loans, ARM applications increased 25% to their highest level since 2022, and the ARM share of all applications was almost 10%. However, lower rates were not enough to entice more homebuyers back into the market, as purchase applications were only up around 1% over the week, although still stronger than last year’s pace.”
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