THIS IS THE REASON WHY REFIS CONTINUE TO DOMINATE MORTGAGE APPS
T
he last report of the Mortgage Bankers Association (MBA) in 2020 revealed that refinancing represented almost threequarters of application activity in the week ending on December 18, 2020, while purchase applications dropped. During the same period, MBA’s Market Composite Index which measures the volume of mortgage loan applications recorded a 0.8% increase on a seasonally adjusted basis from the previous week and was up by 1% on an adjusted basis. Moreover, the Refinance Index surged by 4% from the previous week and was 124% higher than the same time the previous year. Additionally, the refinance share of mortgage activity surged by 74.8% of total applications from 72.7% the previous week. On the other hand, the seasonally adjusted Purchase Index plunged by 5% from the previous week and
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was 7% lower when unadjusted. Purchase activity was also 26% higher than during the same week the previous year. “Mortgage rates are closing the year at record lows. The 30-year fixed-rate - at 2.86 percent - is a full percentage point below a year ago,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Last week’s increase in refinance applications was driven by FHA and VA activity, while conventional refinances saw a slight decline. Overall refinance activity was 124 percent higher than in 2019, as borrowers continue to seek lower monthly payments or different loan terms.”
“Purchase applications decreased for the second time in three weeks, as both conventional and government applications saw a drop-off. Despite the decline, purchase applications remained 26 percent higher than the same week a year ago, and the average loan balance reached another record high,” Joel says.
More people are opting to refinance for their homes due to the historically low mortgage rates. No one wants to be left behind from this once-in-alifetime opportunity.
“There are still signs of relative strength in the housing market as 2020 ends,” he adds. “However, housing affordability will be worth monitoring next year. The lower loan size
THE POWER IS NOW MAGAZINE | FEBRUARY 2021
