Mortgage apps uptick spreads optimism on a refi recovery

Key Takeaways:

– Mortgage rates are at their lowest level in three weeks, leading to an increase in demand for home loans.
– Mortgage applications rose by 10.4% compared to the previous week.
– Average interest rates for 30-year fixed-rate mortgages decreased for both conforming and jumbo loans.
– Purchase and refinance applications were up, with refis comprising 37.5% of total applications.
– The FHA and VA shares of total applications decreased, while the USDA share increased.
– Analysts are cautiously optimistic about a potential refi recovery, but do not expect a boom like during the COVID years.
– Mortgage rates are still relatively high, keeping housing supply tight.

HousingWire:

Mortgage rates at their lowest level in three weeks led to an increase in borrowers’ demand for home loans last week, spreading some optimism in the industry in the first few weeks of 2024. To prove it, analysts are already discussing a potential refi recovery. 

Overall, mortgage applications rose by 10.4% in the week ending Jan. 12, compared to one week earlier, on a seasonally adjusted basis, per the Mortgage Bankers Association‘s (MBA) weekly mortgage applications survey. The MBA survey, conducted weekly since 1990, covers over 75% of all U.S. retail residential mortgage applications. 

“Mortgage rates declined across all loan types as Treasury yields moved lower last week on incoming inflation data, which helped to support a rise in mortgage applications. The 30-year fixed mortgage rate decreased six basis points to 6.75%, the lowest rate in three weeks,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement. 

The MBA survey shows the average interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 6.75% last week from 6.81% the prior week. Rates on jumbo loans (greater than $766,550) fell to 6.86% from 6.98% on a weekly basis.

At HousingWire’s Mortgage Rates Center, the Optimal Blue data shows the rate at 6.60% on Tuesday for conforming loans, down from 6.68% the previous Tuesday. Rates for jumbo loans were at 7.23%, down from 7.27% in the same period. 

Loan types 

According to Kan, purchase and refinance applications were up last week compared to a holiday-adjusted week. The conventional market heavily drove the increases.  

The MBA data shows that purchase apps increased by 9% from one week earlier on a seasonally adjusted basis, and refis were up 11% in the same period. Refis comprised 37.5% of the total applications last week, down from 38.3% the previous week.

The Federal Housing Administration’s (FHA) share of total applications decreased to 14.3% last week from 14.4% the week prior. The U.S. Department of Veterans Affairs (V.A.) share fell to 14.2% from 16.3% in the same period. The U.S. Department of Agriculture (USDA) share increased to 0.5% from 0.4%.

“Although purchase activity is lagging year-ago levels, refinance applications have improved from their recent low point and have been showing year-over-year gains, albeit at low levels. If rates continue to ease, MBA is cautiously optimistic that home purchases will pick up in the coming months,” Kan said. 

In a report to investors on Wednesday, analysts at Jefferies said mortgage rates remain “relatively high to the point where housing supply remains tight by historical standards.” 

Still, the analysts “view the forward curve and recent reductions in the 30-year mortgage rate as signs of life for a potential refi recovery.”

But don’t expect a refi boom like the one during the COVID years

“We do not anticipate a large cycle over the near/intermediate term and believe the rate-term refinance pipeline consists of loans originated since May 2022, or $2 trillion, while the majority of loans outstanding still have coupons well below today’s rates.”  

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Property Chomp’s Take:

is a commonly used HTML element that is used to define a division or a section in a web page. It is a versatile element that allows developers to group and organize content, apply styling, and add functionality to specific sections of a webpage.

In recent news, mortgage rates have hit their lowest level in three weeks, resulting in a surge in demand for home loans. This positive development has brought optimism to the industry in the early weeks of 2024. According to the Mortgage Bankers Association’s weekly mortgage applications survey, mortgage applications increased by 10.4% compared to the previous week. This survey, which has been conducted since 1990, covers a significant portion of all U.S. retail residential mortgage applications.

The decline in mortgage rates across all loan types, driven by lower Treasury yields due to incoming inflation data, has contributed to the rise in mortgage applications. The average interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 6.75% from 6.81% the prior week. Similarly, rates for jumbo loans also saw a decline from 6.98% to 6.86% on a weekly basis.

The increase in mortgage applications was primarily driven by the conventional market. Purchase applications rose by 9% on a seasonally adjusted basis, while refinance applications increased by 11% compared to the previous week. Refinance applications accounted for 37.5% of the total applications, slightly lower than the previous week’s 38.3%.

The share of applications for Federal Housing Administration (FHA) loans decreased slightly to 14.3% from 14.4%, while the share of applications for U.S. Department of Veterans Affairs (VA) loans fell from 16.3% to 14.2%. On the other hand, the share of applications for U.S. Department of Agriculture (USDA) loans increased slightly to 0.5% from 0.4%.

Although purchase activity is still lower than year-ago levels, the improvement in refinance applications is a positive sign. If mortgage rates continue to ease, there is cautious optimism that home purchases will pick up in the coming months.

Analysts at Jefferies, in their report to investors, noted that mortgage rates are still relatively high, resulting in tight housing supply compared to historical standards. However, they see the forward curve and recent reductions in the 30-year mortgage rate as indicators of a potential refinance recovery. It is important to note that this recovery is not expected to reach the levels seen during the COVID years.

In conclusion, the

element plays a crucial role in web development, allowing developers to structure and organize content on a webpage. The recent decrease in mortgage rates has led to an increase in demand for home loans, offering some optimism for the industry in the early months of 2024. While a significant refinance boom is not expected, the potential for a refi recovery is being discussed by analysts. As mortgage rates continue to ease, there is hope that home purchases will see an upward trend in the near future.

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