Due to a significant drop in mortgage rates, mortgage application volume jumped 21.7% during the week ended Aug. 9, according to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey.
The increase was due mainly to a surge in applications for refinances that was driven by the previous week’s significant drop in rates.
Applications for refinances increased 37% on an adjusted basis compared with the previous week to reach the highest level since July 2016, the MBA’s survey shows.
What’s more, applications for refinances were 196% higher compared with the same week one year earlier.
Applications for purchases increased 2% compared with the previous week.
On an unadjusted basis, total volume increased 20% compared with the previous week.
Applications for purchases increased 1% on an unadjusted basis and were 12% higher compared with the same week one year earlier.
“The 2019 refinance wave continued, as homeowners last week responded to extraordinarily low mortgage rates,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a release. “Fears of an escalating trade war, combined with economic and geopolitical concerns, once again pulled U.S. Treasury rates lower.”
Kan points out that the average rate for a 30-year fixed-rate mortgage decreased eight basis points to 3.93%, which is “the lowest level since November 2016 – and has now dropped more than 80 basis points this year.”
“In just the last two weeks, rates have decreased 15 basis points and the refinance index has increased more than 50 percent, reaching its highest level since July 2016,” Kan adds. “The government refinance index, driven by a 25 percent increase in VA refinance applications, is now at its highest level since May 2013.”
The refinance share of mortgage activity increased to 61.4% of total applications, up from 53.9% the previous week.
The adjustable-rate mortgage share of activity increased to 6.0% of total applications.
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