WASHINGTON (1/15/15)--Driven by a 66.4% surge in refinancing activity, mortgage applications blasted into 2015 with a 49.1% jump in the composite index of the Mortgage Bankers Association's mortgage application survey for the week ending Jan. 9 (Economy.com Jan. 14).
Likely driven by the continuing slide of mortgage rates, it was the highest weekly increase in more than six years.
"The U.S. economy and job market continued to show signs of strength, but weakness abroad and tumbling oil prices have led to further declines in longer-term rates," said Mike Fratantoni, MBA chief economist (Housingwire.com Jan. 14). "Mortgage rates reached their lowest level since May of 2013, and refinance application volume soared."
Despite the surge in applications, on a four-week moving average basis refinance activity has dropped 4%, and sits 4.1% lower annually.
Purchase applications on the other hand have climbed 4.7% over the last month and have risen 11.1% year-over-year.
Overall, refinancings make up more than 70% of all mortgage application activity, according to the data.
"The purchase index has fully recovered from losses in December and is higher than it was this time last year, indicating homebuyer demand may be rising," said Michael McGrane, Moody's analyst (Economy.com Jan. 14). "However, because of weekly volatility, additional data are needed before an uptrend in purchase applications can be confirmed."
Mortgage rates continue their descent as well.
The contract rate for 30-year fixed-rate mortgages dropped 12 basis points over the week to 3.89%, which is 17 basis points behind levels seen a month ago and 77 basis points down year-over-year.
For 30-year fixed-rate jumbo mortgages, the rate fell 11 basis points to 3.88%, and the five-year adjustable-rate mortgage rate dropped 25 basis points, ending the week at 2.94%.