Average US rate on 30-year mortgage falls to 3.92 percent

It seems that the 2016 housing market is off to a fast start, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending january 8.

On an unadjusted basis, applications for purchases increased 74% compared with the previous week and increased 19% compared with the same week one year ago.

The MBA’s refinance index increased by 24% week over week, and the percentage of all new applications that were seeking refinancing rose from 55.4% to 55.8%.

MBA’s purchase mortgage application index reached its second highest level since May 2010 on a seasonally adjusted basis last week, second only to the week prior to the implementation of the Know Before You Owe rules. A year ago at this time, the 30-year FRM averaged 3.66 percent.

Looking at application volume by loan type, applications for loans backed by the FHA were 14.4% of all applications – down from 14.6% the previous week.

The following chart shows the average interest rate for 30-year and 15-year fixed rate mortgages since 2006 as well as the purchase, refinance and composite loan volumes. “The net effect on the 30-year mortgage rate was a 5 basis point drop to 3.92 percent”. The best 20 year fixed rate mortgages stand at 3.750% and April of 3.884%. The Veterans Affairs share of total applications was 12.2%, down from 12.9%, and the U.S. Department of Agriculture share of total applications was 0.6%, down from 0.8%. “With rates near their lowest levels since late October, we expect rates to move cautiously upward this week”.

The average contract interest rate for 5/1 ARMs dipped five basis points to 3.14%, with points increasing to 0.42 from 0.32 (including the origination fee) for 80% LTV loans. Base period and value for all indexes is March 16, 1990=100.