by Calculated Risk on 1/15/2020 07:00:00 AM

From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey

Mortgage applications increased 30.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 10, 2020. Last week’s results included an adjustment for the New Year’s Day holiday.

... The Refinance Index increased 43 percent from the previous week and was 109 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 16 percent from one week earlier. The unadjusted Purchase Index increased 51 percent compared with the previous week and was 8 percent higher than the same week one year ago.
...
“The mortgage market saw a strong start to 2020. Applications increased across the board, and the 30-year fixed mortgage rate hit its lowest level since September 2019,” said Joel Kan, Associate Vice President of Economic and Industry Forecasting. “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.”

Added Kan, “Homebuyers were active the first week of the year. Purchase activity was 8 percent 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.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to the lowest level since September 2019, 3.87 percent, from 3.91 percent, with points decreasing to 0.32 from 0.34 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.


The first graph shows the refinance index since 1990.

With lower rates, we saw a sharp increase in refinance activity, but mortgage rates would have to decline further to see a huge refinance boom.

The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is up 8% year-over-year.

Note: Holiday adjustments are difficult, and there are frequently large swings around holidays.