Purchase Applications Resume Upward Climb

Overall mortgage application activity resumed an upward trend last week, with another strong showing for purchase volume.  The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of application volume, increased 2.3 percent on a seasonally adjusted basis during the week ended March 8. On an unadjusted basis, the Index was up 3 percent compared with the previous week.

The seasonally adjusted Purchase Index gained 4 percent from the prior week and was 6 percent higher unadjusted.  Purchase applications were 2 percent higher than during the same week in 2018.  

The Refinance Index dipped 0.2 percent and refinance applications dropped to 38.6 percent of the total from 40.0 percent the prior week. It was the lowest share for refinancing since the week ended November 23, 2018.

Refi Index vs 30yr Fixed

Purchase Index vs 30yr Fixed

"Led by a 5.5 percent increase in FHA loan applications, purchase activity picked up last week and was almost 2 percent higher than a year ago," said Joel Kan, Associate Vice President of Economic and Industry Forecasting. "Purchase applications have now increased year-over-year for four weeks, which signals healthy demand entering the busy spring buying season. However, the pick-up in the average loan size continues, with the average balance reaching another record high. With more inventory in their price range compared to first-time buyers, move-up and higher-end buyers continue to have strong success finding a home." 

The average loan size for home purchases was $326,000.  Loans overall averaged $317,600.

The FHA share of total applications increased to 10.4 percent from 10.3 percent while the VA share declined to 10.2 percent from 10.4 percent.  The USDA share of total applications was unchanged from 0.6 percent the previous week.

Mortgage interest rates were mixed on both a contract and an effective basis but most moved lower.  The average contract interest rate for 30-year fixed-rate mortgages (FRM) with balances at or below the conforming limit of $484,350 decreased to 4.64 percent from 4.67 percent, with points increasing to 0.47 from 0.44. The effective rate decreased from last week.

The jumbo 30-year FRM, loans with balances higher than the conforming limit, was 4.45 percent with 0.34 point.  The average rate during the week ended March 1 was 4.41 percent with 0.25 point.  The effective rate was also higher.

Thirty-year FRM with FHA guarantees had a rate of 4.61 percent, down from 4.66 percent a week earlier.  Points decreased to 0.47 from 0.48 and the effective rate was also lower.   

There was a 6-basis point decline in the average rate for 15-year FRM and points decreased to 0.44 from 0.46. The effective rate declined.   

The rate for 5/1 adjustable rate mortgages (ARMs) ticked up an average of 1 basis point to 4.09 percent.  Points fell to 0.26 from 0.39, pulling the effective rate lower.  The ARM share of activity decreased to 7.2 percent of total applications from 7.4 percent the previous week.

MBA's Weekly Mortgage Applications Survey has been conducted since 1990 and covers over 75 percent of all U.S. retail residential applications Respondents include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100 and interest rate information is based on loans with an 80 percent loan-to-value ratio and points that include the origination fee.