Application Volume Up Again Despite Rising Rates

Mortgage loan application volume continues its rollercoaster trend of rising one week and falling the next, up 12% after falling 7.1% last week, the Mortgage Bankers Association’s (MBA) weekly survey shows.

The adjusted Market Composite Index, a measure of mortgage loan application volume, increased 12%. The adjusted purchase index rose 4%, while the unadjusted purchase index rose 12% and was 7% lower YOY.

The refinance index jumped 18% and was down 50% YOY. Refinances made up 57.3% of total applications.

Mortgage rates continue to climb, with the 30-year fixed-rate reaching its highest level since March 2020 at 3.78%.

“Despite the increase in rates, refinance applications were up 18%, driven mainly by a 22% jump in conventional applications. There has likely been some recent volatility in application counts due to holiday-impacted weeks, as well as from borrowers trying to secure a refinance before rates go even higher,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. 

“Purchase applications also increased in the final full week of January but remained 7% lower than a year ago. The average purchase loan size hit a new survey high once again at $441,100. Stubbornly low inventory levels and swift home-price growth continue to push average loan sizes higher.”   

The FHA share of total applications fell to 7.7% from 8.6%. The VA share of total applications fell to 9.1% from 9.9%, while the USDA share of total applications dropped to 0.4% from 0.5% the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances rose from 3.72% to 3.78%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances rose from 3.56% to 3.59%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA rose to 3.86% from 3.69%.