Requests to refinance existing mortgages were up 18 percent week over week but down 50 percent from a year ago.

A big weekly jump in mortgage applications could be an indication that some borrowers are trying to get ahead of rising rates, but could also reflect pent-up demand as applicants follow through on plans they put off over the holidays.

Either way, demand for both purchase mortgages and refinancing remains below levels seen a year ago, according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey.

During the week ending Jan. 28, the MBA survey showed applications for purchase loans were up a seasonally adjusted 4 percent from the week before, but down 7 percent from a year ago. Requests to refinance existing mortgages were up 18 percent week over week, but down 50 percent from a year ago.

Joel Kan

“There has likely been some recent volatility in application counts due to holiday-impacted weeks, as well as from borrowers trying to secure a refinance before rates go even higher,” with rates on 30-year fixed-rate loans at their highest level since March 2020, said MBA forecaster Joel Kan in a statement. “The average purchase loan size hit a new survey high once again at $441,100. Stubbornly low inventory levels and swift home-price growth continue to push average loan sizes higher.”

Requests to refinance accounted for 57.3 percent of all mortgage applications, up from 55.8 percent the week before.

The Mortgage Bankers Association reported average rates for the following types of loans during the week ending Jan. 28:

  • For 30-year fixed-rate conforming mortgages (loan balances of $647,200 or less), rates averaged 3.78 percent, up from 3.72 percent the week before. Although points decreased to 0.41 from 0.43 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans, the effective rate still increased from the week before.
  • Rates for 30-year fixed-rate jumbo mortgages (loan balances greater than $647,200) averaged 3.59 percent, up from 3.56 percent the week before. Although points decreased to 0.31 from 0.38 (including the origination fee) for 80 percent LTV loans, the effective rate also increased.
  • For 30-year fixed-rate FHA mortgages, rates averaged 3.86 percent, up from 3.69 percent the week before. Points decreased to 0.55 from 0.61 (including the origination fee) for 80 percent LTV loans, but the effective rate still increased from the week before.
  • Rates for 15-year fixed-rate mortgages, popular with borrowers who are refinancing, averaged 3.01 percent, essentially unchanged from 3.00 percent the week before. But with points increasing to 0.41 from 0.39 (including the origination fee) for 80 percent LTV loans, the effective rate increased from the week before.
  • For 5/1 adjustable rate mortgages (ARMs), rates averaged 3.09 percent, down from 3.18 percent the week before. Although points increased to 0.35 from 0.33 (including the origination fee) for 80 percent LTV loans, the effective rate still decreased from the week before.

Mortgage rates have been steadily rising as the Federal Reserve prepares to taper its mortgage purchases and begin raising short-term interest rates as early as next month. Some Fed policymakers are also eager to start shrinking the Fed’s balance sheet to combat inflation.

During the pandemic, the Fed was buying $80 billion in long-term Treasury notes and $40 billion in mortgage-backed securities every month, helping push mortgage rates to record lows.

The Fed began tapering those asset purchases in November, a process that it accelerated in December as inflation worries mounted. On Jan. 26, the Federal Open Market Committee announced plans to buy $20 billion in Treasurys and $10 billion in mortgages in February, and then end the Fed’s asset purchases in early March.

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Email Matt Carter

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