Mortgage activity saw a notable increase in June 2024, as the Mortgage Bankers Association (MBA) reported an 8.2% rise in the Market Composite Index, which tracks mortgage loan application volumes. This increase, on a seasonally adjusted (SA) basis, compares to a 1.0% rise from June 2023. The surge in mortgage activity was largely driven by gains in both the Purchase and Refinance indices, which rose by 4.1% and 14.3%, respectively, on a monthly basis. However, on a year-over-year basis, the Purchase Index experienced a 10.8% decrease, while the Refinance Index saw a more significant increase of 29.4%.
The increase in mortgage activity was influenced by a decline in the 30-year fixed mortgage rate, which dropped by 9.8 basis points, from 7.08% in May to 6.98% in June. Despite this decrease, the mortgage rate for June remained higher compared to the same month last year, showing a 19.8 basis point increase.
Average Loan Sizes and Trends
The average loan size for all mortgage types, including both purchase and refinance loans, decreased by 2.0% in June, bringing it to an average of $373,500. The decrease in loan sizes was driven by a 1.7% drop in the average loan size for purchase loans, which fell to $431,000. On the other hand, refinance loans saw a 4% increase in their average size, rising to $268,500. Notably, the average loan size for adjustable-rate mortgages (ARMs) rose by 2.9%, from $1 million to $1.03 million, signaling a trend toward higher loan amounts for this type of mortgage.
The uptick in mortgage activity, especially in refinances, comes amid a slightly more favorable interest rate environment. Although mortgage rates remain elevated compared to a year ago, the drop in June may have encouraged some borrowers to take advantage of refinancing options. With a decline in rates and more mortgage options becoming available, homebuyers and homeowners alike are showing increased interest in mortgages as the market continues to adjust to changing conditions.