Dip in rates has an impact
Mortgage application volume surged 7.1% last week as mortgage rates fell below 7% amid signs of economic cooling, according to the Mortgage Bankers Association’s (MBA) latest Weekly Mortgage Applications Survey.
The market composite index, a measure of mortgage loan application volume, increased 7.1% on a seasonally adjusted basis for the week ending March 8, compared to the prior week. On an unadjusted basis, applications jumped 8%.
“Mortgage rates dropped below 7% last week for most loan types because of incoming economic data showing a weaker service sector and a less robust job market, with an increase in the unemployment rate and downward revisions to job growth in prior months,” said MBA chief economist Mike Fratantoni.
The rate drop spurred an uptick in purchase and refinance activity for the week.
The refinance index climbed 12% from the previous week and was 5% higher than the same week a year ago. While a 12% weekly gain sounds large, Fratantoni noted that the overall refinance volume remains low.
“We expect that most of this activity reflects borrowers who took out a loan at or near the peak of rates in the past two years,” he said.
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The purchase index, a gauge of homebuyer demand, increased 5% for the week on a seasonally adjusted basis. However, purchase application volume remained 11% below year-ago levels amid still-elevated mortgage rates and home prices.
Breaking it down by loan type, the refinance share of total applications rose to 31.6% from 30.2% the prior week. The adjustable-rate mortgage (ARM) share held steady at 7.7%.
For government loans, the FHA share decreased to 12% from 12.7%, while the VA share increased to 12.2% from 11.4%. The USDA share remained flat at 0.5%.
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