The Mortgage Bankers Association’s latest Weekly Application Survey shows that, for the week ending October 23, 2020, mortgage application activity increased by 1.7% from the prior week on a seasonally adjusted basis, as indicated by its Market Composite Index. Its two constituent indexes, the Purchasing Index and the Refinance Index, increased by 1.7% and 0.2%, respectively. The MBA’s tracked 30-year fixed-rate mortgage rate, returned to the survey low of 3.00%, first reached just two weeks before.
Purchasing and Refinancing continued showing year-over-year gains, of 24% and 80%, respectively. This was the largest year-over-year gain in Refinancing in the last five weeks. Purchasing gains this week marked the 23d straight week of year-over-year gains. The refinance share of mortgage activity increased to 66.7% of total applications from 66.1% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 2.1 percent of total applications.
The MBA survey additionally indicates that the average loan size reached another record high at $372,600, evidence of outsized growth rates in higher loan size categories. Thus, the upper end of the market is booming. Housing inventory shortages have also been responsible for the appreciation of home prices across the nation. The ongoing COVID-19 pandemic has made the beneficiaries of the low interest rate environment skew towards higher-income-earning borrowers, thus explaining why the share of refinancing activity is twice as that of purchasing.