The MBA's Market Composite Index, a measure of weekly mortgage application volumes based on surveys of the trade group's members, accelerated a seasonally adjusted 16.8% for the seven days ending Aug 9. Volumes rose for the second week in a row, and compared to the same survey period a year ago, the total number of applications came in 30.2% higher. 

Interest rates came in mostly flat compared to the quick pace of descent earlier in the month, but still provided lenders some momentum, said Joel Kan, MBA vice president and deputy chief economist. The level of application activity was at its highest since January 2023. 

"Rates on both 30- and 15-year fixed rate mortgages decreased for the second consecutive week, and combined with the previous week's rate moves, spurred another strong week for application activity as borrowers with higher rates took the opportunity to refinance," Kan said in press release.

The contract fixed rate for 30-year mortgages with conforming balances, which make them eligible for secondary market sales to government-sponsored enterprises, edged down by a single basis point to 6.54% from 6.55%. Points used to help buy down the rate slipped to 0.57 from 0.58 for 80% loan-to-value ratio applications. 

Rates proved attractive enough to borrowers, though, who pushed the Refinance Index up 34.5% higher week over week, trending even higher than the previous week's growth of 15.9%. The index saw its strongest performance in over two years, driven by elevated activity across government and conventional lending. Volumes were also 118% above activity from a year ago. 

Conventional refinances accelerated 26.7%, while loans coming through Federal Housing Administration programs grew 28.2%. Refinances of Department of Veterans Affairs-backed loans leaped 74.3% from the prior week, following frequent upticks in the segment earlier this summer. 

The latest MBA  data corresponds to findings in other leading mortgage indicators, including Optimal Blue, which saw refinances nab their highest share of lock volume in almost two years last month. Early numbers from August show the surge continuing, the product-and-pricing engine provider said. 

In MBA's survey, refinance applications last week grew to a 48.6% share relative to total volume, zooming up from 41.7% seven days earlier.

Alongside increased activity and market share, the amounts of refinance transactions are also accelerating rapidly. After crossing the $300,000 threshold for the first time this year in the previous survey, the average refinance amount climbed up another 20.8% to $377,600 from $312,400 among MBA lenders.

Meanwhile, the seasonally adjusted Purchase Index also posted an increase, rising 2.8% from one week prior. Small gains were observed across loan categories, "indicating that prospective homebuyers are slowly reentering the market," Kan noted. 

Compared to the same period last year, though, volumes were 7.9% lower, as recent rates still disincentivize many households to buy or move.  

Federally guaranteed loan activity increased significantly primarily thanks to heightened refinance interest. The seasonally adjusted Government Index finished last week up 26.8% from seven days earlier. Meanwhile, government-backed loans garnered a larger share of the market as well.

VA-sponsored applications accounted for 16.8% of activity, shooting up from 14.3% in the previous weekly survey. FHA-backed activity inched up to a 13.5% share, compared to 13.4%. The small FHA  increase offset a pullback in loans guaranteed by the U.S. Department of Agriculture to 0.3% from 0.4% week over week. 

Other 30-year fixed rates hovered near the previous week's levels, similar to the conforming average. The mean 30-year fixed-contract jumbo rate came in at 6.78%, a 1 basis point increase from the prior survey. Borrowers typically used 0.37 worth of points, down from 0.5 for 80% LTV loans.