Sep 07, 2024
Mortgage Applications Rise 1.6% with Boost in Purchase and Refinance Transactions
Mortgage applications grew by 1.6% in the final week of August, with a rise in both purchase and refinance activity.
During the last week of August, mortgage applications increased by 1.6%, driven by growth in both purchase and refinance transactions. The Mortgage Bankers Association (MBA) reported a 3% rise in purchase applications, edging closer to last year’s levels, and noted government-backed loans led the increase. Despite a slight dip in refinance applications, the refinance share of the total reached its highest monthly average since March 2022.
Mortgage Applications Rise by 1.6% in Late August
Mortgage application activity grew by 1.6% during the final week of August, thanks to an uptick in both purchase and refinance transactions, according to the latest data from the Mortgage Bankers Association (MBA).
The MBA’s Weekly Applications Survey for the week ending August 30 showed a seasonally adjusted 1.6% increase in loan application volume. On an unadjusted basis, applications were up by 0.2%.
Purchase Applications Lead the Growth
While the Refinance Index dipped slightly by 0.3% from the previous week, it remained 94% higher compared to the same week last year. Meanwhile, the seasonally adjusted Purchase Index increased by 3% week-over-week, although it was still 4% lower compared to the same time last year.
“Purchase applications increased more than three percent over the week and are inching closer to last year’s levels, with government purchase applications leading the increase,” said Joel Khan, MBA’s Vice President and Deputy Chief Economist.
Refinance Activity Sees a Slight Decrease
The refinance share of mortgage applications averaged nearly 46% for August, the highest monthly figure since March 2022. However, the Refinance Index itself fell by 0.3% week-over-week.
Adjustable Rate and Government Loans
The share of adjustable-rate mortgages (ARM) held steady at 5.5% of total applications. Meanwhile, the Federal Housing Administration (FHA) share of applications dropped to 14.6% from 15.3% the week before. The Department of Veterans Affairs (VA) loan share increased to 16.7%, up from 15.9%. The share of loans backed by the U.S. Department of Agriculture (USDA) remained unchanged at 0.4%.
Interest Rates Show Minor Adjustments
For 30-year fixed-rate mortgages with conforming loan balances (loans of $766,550 or less), the average contract interest rate slightly decreased to 6.43% from 6.44%, with points increasing to 0.56 from 0.54 for 80% loan-to-value ratio (LTV) loans.
For 30-year fixed-rate jumbo loans (greater than $766,550), the average rate also dropped slightly to 6.73% from 6.75%, while points decreased from 0.39 to 0.35 for 80% LTV loans.
The Bottom Line
The modest increase in mortgage applications at the end of August shows signs of stability in the housing market, especially with the continued growth in purchase transactions. While refinancing has slightly tapered, the overall market remains strong. As interest rates fluctuate, prospective homebuyers and those looking to refinance should stay informed about current trends and available financing options.
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