Weekly mortgage applications advanced to their highest level since July 2022 amid a flurry of refinance activity as the 30-year fixed rate for conforming loan balances fell for the eighth straight week. The Mortgage Bankers Association reported a significant uptick in activity this past week. The market composite index, which measures loan application volume, climbed 11% for the week ended Friday on a seasonally adjusted basis, marking its fifth straight week of gains.
Without adjustments, the index also reported an 11% increase week to week. Notably, the refinance index soared 20% on a weekly basis, following a remarkable 24% increase the previous week, with the figure now standing 175% higher than a year ago. The refinance share of mortgage activity rose to 55.7% last week, up from 51.2% the previous week.
As Joel Kan, the association's deputy chief economist, pointed out, "While the level of refinance activity is still modest compared to prior refi waves, they now account for the majority of applications, given the seasonal slowdown in purchase activity." In terms of purchases, the seasonally adjusted purchase index saw a slight increase of 1% sequentially.
Without the seasonal adjustments, the index rose by 0.4% on a weekly basis and remained up by 2% year over year. Moreover, average loan sizes surged for both purchase and refinance applications, leading to the overall average loan size reaching a record high of $413,100, according to Kan. The average interest rate for 30-year fixed-rate mortgages with conforming loan balances of $766,550 or less decreased to 6.13% from 6.15% week over week.
This drop in rates drove notable week-over-week gains for both conventional and government refinance applications. On the other hand, for loan balances exceeding $766,550, the rate edged up slightly to 6.47% from 6.41%. For 15-year loans, the rate grew to 5.47% from 5.42%. Finally, fixed-rate mortgages with 30-year terms backed by the Federal Housing Administration declined to 5.99% from 6.12% over the week.
The percentage of FHA loans, generally favored by first-time home buyers due to their lower down payment options, dipped to 15% of total applications from 15.2% the week before..