MBA Weekly Survey Mar. 3: Rates Up; So Are Applications

Mortgage interest rates jumped sharply last week to their highest level since July, and mortgage applications increased as well, as some home buyers sensed the possible end of a good thing, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending February 26.

The Market Composite Index increased by 0.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 2 percent compared to the previous week.

The unadjusted Refinance Index increased by 0.1 percent from the previous week and was 7 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 67.5 percent of total applications from 68.5 percent the previous week.

The seasonally adjusted Purchase Index increased by 2 percent from one week earlier. The unadjusted Purchase Index increased by 5 percent compared to the previous week and was 1 percent higher than the same week one year ago.

“Mortgage rates jumped last week on market expectations of stronger economic growth and higher inflation,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The overall share of refinances declined for the fourth consecutive week, and conventional refinance applications fell more than 2 percent to the lowest level in four months.”

Kan noted government refinance applications historically lag the more rate-sensitive movements of conventional applications, and that was true last week, as both FHA and VA refinancing volumes increased. “The housing market is entering the busy spring buying season with strong demand,” he said. “Purchase applications increased, with a rise in government applications – likely first-time buyers – pulling down the average loan size for the first time in six weeks.”

The FHA share of total applications increased to 12.1 percent from 11.2 percent the week prior. The VA share of total applications increased to 12.3 percent from 11.9 percent the week prior. The USDA share of total applications increased to 0.4 percent from 0.3 percent the week prior.

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.23 percent from 3.08 percent, with points increasing to 0.48 from 0.46 (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 $548,250) increased to 3.33 percent from 3.23 percent, with points decreasing to 0.41 from 0.43 (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 3.19 percent from 3.00 percent, with points decreasing to 0.30 from 0.33 (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 2.64 percent from 2.56 percent, with points decreasing to 0.39 from 0.40 (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 increased to 2.84 percent from 2.83 percent, with points increasing to 0.58 from 0.36 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity increased to 2.9 percent of total applications.

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.