Borrowers looking to refinance were quick to take advantage of a slight drop in interest rates last week. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, jumped 8.1 percent on a seasonally adjusted basis during the week ended January 29, and was up 10 percent on an unadjusted basis. The index had declined in each of the two previous weeks.
The Refinance Index increased 11 percent from the previous week, also reversing two weeks of losses, and was 60 percent higher than the same week one year ago. The refinance share of mortgage activity increased to 71.4 percent of total applications from 70.7 percent the previous week.
The seasonally adjusted Purchase Index ticked up 0.1 percent and was 8 percent higher on an unadjusted basis. The index was 16 percent above its level the same week in 2020.
The FHA share of total applications decreased to 9.1 percent from 9.4 percent the prior week prior and the VA share dipped to 12.1 percent from 12.4 percent. The USDA share of total applications decreased to 0.4 percent from 0.5 percent. The average balance of a mortgage was $332,100 compared to $329,700 a week earlier while the average balance of a purchase mortgage increased $400 to $398,600.
While the conforming 30-year mortgage caught a rate decrease last week, other rates were mixed. The average contract interest rate for 30-year loans with origination balances at or below the conforming limit of $548,250 decreased to 2.92 percent from 2.95 percent, with points remaining at 0.32. The effective rate decreased to 3.01 percent.
The average contract interest rate for jumbo 30-year fixed rate mortgages (FRM), loans with balances greater than the conforming limit, decreased to 3.12 percent from 3.17 percent, with points increasing to 0.32 from 0.31. The effective rate was 3.22 percent.
Thirty-year FRM backed by the FHA saw a 6-basis point increase to 2.94 percent. Points decreased to 0.29 from 0.34 and the effective rate rose to 3.03 percent.
The average contract interest rate for 15-year FRM was 2.44 percent with 0.32 point. The prior week the rate was 2.43 percent, also with 0.32 point. The effective rate increased to 2.53 percent.
The average contract interest rate for 5/1 adjustable-rate mortgages (ARMs) rose to 2.88 percent from 2.60 percent, with points increasing to 0.46 from 0.38. The effective rate increased to 3.05 percent. The ARM share of activity was unchanged at 2.2 percent of total applications.
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