Mortgage applications soared again as treasury yields pushed rates to their lowest level in three weeks.
The Mortgage Bankers Association’s weekly survey shows the adjusted Market Composite Index – a measure of mortgage loan application volume – jumped 10.4% on the heels of the week prior’s 9.9% bump.
Adjusted purchase applications rose by 9%, while the unadjusted index increased by 28% and was 20% lower YOY.
Refis also saw an increase of 11% and accounted for 37.5% of total applications. In the past decade, they averaged 58% of all activity.
The rush comes as the 30-year fixed-rate fell to 6.75% from 6.81%. Americans seem to be taking advantage of cooling rates in the new year after little activity in the last weeks of 2023.
“Compared to a holiday-adjusted week, both purchase and refinance applications were up, and the increases were heavily driven by the conventional market. 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,” said MBA Vice President and Deputy Chief Economist Joel Kan.
“If rates continue to ease, MBA is cautiously optimistic that home purchases will pick up in the coming months.”
Kan noted that Treasury yields moved lower last week, influenced by expectations for incoming inflation data, pushing rates down.
The coming week may produce different results, however, after the 10-year Treasury yield jumped Tuesday in response to comments from Federal Reserve Governor Christopher Waller suggesting a slower easing of monetary policy in 2024 than Wall Street hoped for.
“When the time is right to begin lowering rates, I believe it can and should be lowered methodically and carefully,” Waller said in prepared remarks at the Brookings Institution.
“In many previous cycles … the FOMC cut rates reactively and did so quickly and often by large amounts. This cycle, however, … I see no reason to move as quickly or cut as rapidly as in the past.”
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