Applications Increase Again On Refi Strength

Mortgage applications increased again, buoyed by refinance strength as purchase demand remained constrained.

The Mortgage Bankers Association’s weekly survey shows that the adjusted Market Composite Index — a measure of mortgage loan application volume — ticked up by 2.3% last week, adding to the week prior’s 2.2% increase.

Adjusted purchase applications slipped by 2%, while the unadjusted index was up 4% and 2% higher year-over-year.

Refinances, meanwhile, had their strongest showing since December, up 10% on the week and 33% YOY. Their share of mortgage activity rose to 40.2% of total applications.

“The average loan size for refinance borrowers increased, as these borrowers tend to be more responsive for a given change in rates,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist.

Lenders are taking note and rolling out new offerings. Mortgage credit availability saw a boost in January, with a push for cash-out refis.

“Purchase applications were down from the previous week’s level but were slightly ahead of last year’s pace. The average loan size for a purchase application increased to its highest level since March 2022 at $456,100, partially driven by fewer FHA purchase applications but more VA loans compared to the previous week,” Kan added.

High home prices are keeping many buyers locked out of the market, as monthly payments remain out of reach for the typical earner.

Refinance demand benefits from a growing share of homeowners with high rates. Across the country, 17.2% of homeowners have rates greater than or equal to 6%, the highest share since 2016.

However, 82.2% of homeowners still have rates below 6%, down from more than 90% in 2022 but still a barrier to a booming market.