Mortgage Applications Up Third Week in MBA Weekly Survey

Mortgage applications increased for the third consecutive week as key interest rates jumped to nearly three-year highs, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending March 10.

The Market Composite Index increased by 3.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 4 percent compared to the previous week.

The Refinance Index increased by 4 percent from the previous week. The refinance share of mortgage activity increased to 45.6 percent of total applications from 45.4 percent the previous week.

The seasonally adjusted Purchase Index increased by 2 percent from one week earlier. The unadjusted Purchase Index increased by 3 percent compared to the previous week and was 6 percent higher than the same week one year ago.

The FHA share of total applications decreased to 11.1 percent from 11.8 percent the week prior. The VA share of total applications decreased to 11.1 percent from 11.6 percent the week prior. The USDA share of total applications remained unchanged at 0.9 percent from the week prior.

“Over the past week, Federal Reserve officials have clearly indicated that they expect to increase short-term rates at their meeting today,” said MBA Chief Economist Mike Fratantoni. “Rates have moved in response, including an increase in mortgage rates to their highest level since 2014.”

Fratatnoni noted surprisingly, refinance application volume increased for the week, “perhaps a sign that homeowners see rates moving away from them and are moving to lock in now before rates increase further. Purchase application volume is running 6 percent ahead of last year. February’s job report showed strong job growth and faster wage growth. We expect that the benefits from growing household incomes will continue to outweigh the headwind of slightly higher mortgage rates. We continue to forecast strong growth in home sales this year.”

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) increased to its highest level since April 2014, 4.46 percent, from 4.36 percent, with points decreasing to 0.37 from 0.44 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) increased to its highest level since April 2014, 4.44 percent, from 4.27 percent, with points increasing to 0.28 from 0.26 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by FHA increased to its highest level since January 2014, 4.29 percent, from 4.18 percent, with points increasing to 0.39 from 0.32 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.66 percent from 3.57 percent, with points increasing to 0.45 from 0.36 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 adjustable-rate mortgages decreased to 3.45 percent from 3.48 percent, with points increasing to 0.24 from 0.20 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity increased to 8.2 percent of total applications, the highest level since October 2014.

The survey covers more than 75 percent of all U.S. retail and consumer direct residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.