Mortgage Rates Hold Steady Into February
Understanding the Latest Trends in Mortgage Applications
The Mortgage Bankers Association (MBA) recently released data from its Weekly Mortgage Applications Survey for the week ending February 2, 2024. According to the report, mortgage applications experienced a notable uptick, increasing by 3.7% from the previous week. This growth is reflected in the Market Composite Index, which measures mortgage loan application volume and also saw a 3.7% increase on a seasonally adjusted basis.
Refinance and Purchase Activity
The Refinance Index surged by 12% from the prior week and showed a 1% increase compared to the same period last year. However, the Purchase Index, while up by 6% on an unadjusted basis, witnessed a 1% decrease on a seasonally adjusted basis. Despite the slight dip, purchase activity at the beginning of 2024 has been robust compared to the final quarter of 2023.
Joel Kan, MBA's Vice President and Deputy Chief Economist, provided valuable insights into the current mortgage market dynamics: “Mortgage rates have stayed close to where they started the year, despite swings in Treasury yields because of slowing inflation offset by stronger than expected readings on the job market. The 30-year fixed mortgage rate was 6.8 percent, a slight increase from last week.”
Kan also noted, “Rates at these levels have not prompted much of a reaction in the refinance market, as most homeowners have mortgages with much lower rates. Purchase activity has been strong to start 2024 compared to the final quarter of 2023. However, activity is still weaker than a year ago because of low housing supply.”
Market Share and Interest Rate Variations
The MBA's report also highlighted shifts in market share among different types of mortgage applications. The refinance share of mortgage activity increased to 35.4%, while the adjustable-rate mortgage (ARM) share decreased slightly to 6.4%. Additionally, variations in average contract interest rates were observed across different loan types and sizes. For instance, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased slightly to 6.80%, while rates for jumbo loan balances saw a decrease to 6.88%.
The latest data from the MBA's Weekly Mortgage Applications Survey provides valuable insights into the current state of the mortgage market. Despite fluctuations in interest rates and market dynamics, mortgage application activity continues to demonstrate resilience and growth. Whether you're a potential homebuyer or a mortgage industry professional, staying informed about these trends is essential for making informed decisions in the ever-evolving real estate landscape.