As mortgages continued to moderate, potential home buyers were flocking to the opportunity to secure a lower interest rate, Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey data showed.
What Happened: The Market Composite Index — a measure of mortgage loan application volume — increased 27.9% on a seasonally adjusted basis from one week earlier.
On an unadjusted basis, the index increased 32% compared to the previous week.
In terms of interest rates, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 6.23% from 6.42%.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances also decreased to 6.08% from 6.09%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.26% from 6.39%, while the average contract interest rate for 15-year fixed-rate mortgages decreased to 5.58% from 5.94%.
Read Also: Is There Going To Be A Housing Market Crash In 2023?
Finally, the average contract interest rate for 5/1 ARMs decreased to 5.31% from 5.37%.
The Refinance Index also saw a significant increase, rising 34% from the previous week with high-interest rate homebuyers rushing to refinance to a lower rate.
It should be noted that current refinance data came in 81% lower than the same week one year ago.
The refinance share of mortgage activity increased to 31.2% of total applications from 30.7% the previous week. Meanwhile, the adjustable-rate mortgage (ARM) share of activity decreased to 6.6% of total applications.
“Mortgage application activity rebounded strongly in the first full week of January, with both refinance and purchase activity increasing by double-digit percentages compared to last week, which included the New Year’s holiday observance,” said Mike Fratantoni, MBA’s senior vice president and chief economist.
Why It Matters: After exceptionally low rates during the first few years of the COVID-19 pandemic gave way to rising rates as the Federal Reserve raised its Fed funds target, prospective homeowners anticipate that this year will be better on the mortgage front.
In the months ahead, the Fed is likely to begin reducing rate increases.
Read Next: Which Billionaire Owns The Most Land In The U.S.? Hint, It's Not Bill Gates
Photo: Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
