Mortgage Apps: Strong January For Both Refis and Purchase Apps

Bottom Line: Mortgage applications rose in the final week of January, a month that saw a sharp increase in applications for both refinancing and purchases as 30-year fixed-rate mortgage rates fell below 3.75%. While adjustable-rate mortgages saw rates mostly steady on the month, their share of applications increased modestly over the course of the month. Anecdotal evidence has suggested for some time that affordability has hampered activity, so the increase in ARMs could suggest borrowers are reaching for lower monthly payments. Overall, purchase applications suggest the uptrend in existing home sales that re-started in mid-2019 can continue. Meanwhile, the uptick in refinancing applications suggests homeowners will have greater free cash flow to use for consumption and savings. The MBA Mortgage Applications Index ROSE by 5.0% during the week ended January 31 to 682.0, sharply above its 13 week average of 550.4 and 80.0% ABOVE its year ago level. The Purchase Index FELL by 9.5% to 283.8, modestly above its 13 week average of 273.8 and 11.7% ABOVE its year ago level. The Refinance Index ROSE by 15.3% to 2,976. Despite this increase, refinancing activity is sharply above its 13 week average of 2,167 and 176.2% ABOVE its year ago level. Contract Mortgage Rates FELL with the 30-year fixed rate declining by 10 bps to 3.71% and with the 15-year fixed rate declining by 5 bps to 3.19%.