Mortgage applications increased for a fourth week, inching up as home price indicators show decelerating growth.
The Mortgage Bankers Association’s weekly survey says the adjusted Market Composite Index – a measure of mortgage loan application volume – rose by 2.9%, close to last week’s 3% increase.
Adjusted purchase applications increased by 2%, while the unadjusted index was up 2% from the week before and 35% lower YOY.
Mortgage rates fell slightly, with the average interest rate for 30-year fixed loans down from 6.48% to 6.45%. This is the lowest level in more than a month.
“While the 30-year fixed rate remained 1.65 percentage points higher than a year ago, homebuyers responded, leading to a fourth straight increase in purchase applications,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist.
“Home-price growth has slowed markedly in many parts of the country, which has helped to improve buyers’ purchasing power. Purchase applications remain over 30% behind last year’s pace, but recent increases, along with data from other sources showing an uptick in home sales, is a welcome development.”
Pending home sales were up for a third consecutive month in February, with only the West seeing declines. Price growth has decelerated in much of the country, especially in expensive West Coast cities as buyers flock to more affordable areas.
Refinances were up 5% from the week prior, though they remain 61% lower than the same time last year, comprising only 29.1% of total applications.
“Most homeowners still have rates significantly lower than current levels, leaving only a small pool of borrowers with an incentive to refinance,” Kan added.
Rates are still two percentage points higher than at the same time last year, making refinancing unattractive for many borrowers who locked in rates before increases. In the past decade, refis averaged 58% of total activity.
Respondents to a N.Y. Federal Reserve Bank survey said they were highly unlikely to refinance in the next twelve months, with the number who are considering a refi falling to a record low.
Other key findings include:
-The FHA share of total applications remained unchanged at 12.3% with an average interest rate of 6.33%, up from 6.32%.
-The VA share dropped to 11.6% from 11.7%, and the USDA share remained unchanged at 0.5%.
–ARMs accounted for 8.6% of applications, and the rates for these loans fell from 5.58% to 5.62%.
-The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances fell to 6.27% from 6.30%.
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