MBA Survey: Rates Decline Modestly, Mortgage Applications Increase

Bottom Line: Mortgage activity rose sharply in the latest week, rebounding from depressed levels around the holidays. Mortgage rates were down modestly on the week but are still averaging about 15 basis points higher than in October when 30 year conforming balance mortgage rates hovered just below 4.00%. Home buying increased sharply while refinancing activity rose for the 6th time in the last 13 weeks. The MBA Mortgage Applications Index ROSE by 21.3% during the week ended January 8 to 398.5, still modestly below its 13 week average of 410.6 and 17.6% BELOW its year ago level. On a longer term basis, mortgage applications rose from early 2011 until May 2013 when the trend topped out and began a steady retreat. However, the declining trend bottomed in December 2014, turned sharply higher in early 2015 but the trend is now shifting lower. The Purchase Index ROSE by 17.8% to 231.1, moderately above its 13 week average of 211.5 and 19.8% ABOVE its year ago level. The level of purchase activity had stayed quite low, amid moderate volatility, since May 2010 but is now turning moderately higher. The Refinance Index ROSE by 23.8% to 1,380. Despite this increase, refinancing activity is sharply below its 13 week average of 1,565 and 37.6% BELOW its year ago level. This sub-index trend is now moderately lower after the Fed hike. Contract Mortgage Rates FELL with the 30-year fixed rate declining by 8 bps to 4.12% and with the 15-year fixed rate declining by 5 bps to 3.42%.