It's a promising sign for the housing market
The Mortgage Bankers Association (MBA) reported a notable increase in mortgage applications for the week ending March 1, signaling a positive shift in the housing market.
According to the MBA’s Weekly Mortgage Applications Survey, there was a 9.7% rise in the Market Composite Index, a key indicator of mortgage loan application volume, from the previous week. This adjustment is seasonally accounted for, with an even more impressive 12% jump on an unadjusted basis.
The survey also highlighted a surge in the Refinance Index by 8% from the week before, although it remains 2% lower than the same period last year. The seasonally adjusted Purchase Index saw an 11% increase, while its unadjusted counterpart rose by 13%, despite being 8% lower than the same week a year ago.
“The latest data on inflation was not markedly better nor worse than expected, which was enough to bring mortgage rates down a bit, with the 30-year fixed mortgage rate declining slightly last week to 7.02%,” MBA senior vice president Mike Fratantoni said, adding that the significant boost in mortgage applications, particularly for FHA loans, underscores the first-time homebuyer segment’s sensitivity to rate fluctuations.
Fratantoni also suggested the increase in new listings was a positive sign for the upcoming spring buying season, given the current shortage of for-sale inventory.
Read next: How is the US housing market performing as spring buying approaches?
Further insights from the report show a decrease in the refinance share of mortgage activity, dropping to 30.2% of total applications from 31.2% the previous week. Conversely, the adjustable-rate mortgage (ARM) share saw an uptick to 7.7% of total applications.
The survey detailed changes in application shares by loan type, with the FHA share dipping slightly to 12.7% from 13.0%, and the VA share falling to 11.4% from 11.7%. The USDA share remained steady at 0.5%.
Interest rates showed mixed trends across different mortgage types. The average rate for 30-year fixed-rate mortgages with conforming loan balances saw a minor decrease, while jumbo loans experienced a slight increase. Rates for FHA-backed 30-year fixed mortgages remained unchanged.
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