Applications Picked Up Last Week, Reversing Downturn

Mortgage applications pulled back from a weeks-long stretch of declines, increasing last week across the board.

The Mortgage Bankers Association’s weekly survey shows that the adjusted Market Composite Index—a measure of mortgage loan application volume—increased by 9.7%, reversing the week prior’s 5.6% dip.

Adjusted purchase applications rose by 11%, while the unadjusted index was up by 13% and was 8% lower YOY. The data is adjusted to include the President’s Day holiday.

Rates moved down slightly but not by much, reaching 7.02%. This is elevated from the beginning of the year, but rate-sensitive buyers may be inclined to lock in here before they move any higher.

“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,” said Mike Fratantoni, MBA’s SVP and Chief Economist.

“Of note, purchase volume – particularly for FHA loans – was up strongly, again showing how sensitive the first-time homebuyer segment is to relatively small changes in the direction of rates. Other sources of housing data are showing increases in new listings, which is a real positive for the spring buying season given the lack of for-sale inventory.”

Inventory improved considerably in February, new data suggests, though it remains constrained. Still, any increase in stock is good news for buyers who are competing for the few homes available.

Importantly, affordable homes in particular saw a boost last month. Homes priced between $200,000 to $350,000 saw the biggest increases of any price category in February.

Improvements are region-dependent, however. The South drove the increase in affordable listings and accounted for more than half of all houses for sale. Americans no longer have the same “pick up and move” attitude they did in the immediate pandemic aftermath, and Northeastern and Midwestern markets are growing in popularity. Finding a well-priced house there may yet prove to be a challenge.

Refinances also increased by 8%, though the purchase boost pushed their share down to 30.2% of applications. They remain historically low thanks to the super-low rates many homeowners locked in during the pandemic. In the past decade, they averaged 58% of all activity.