MBA: Application Volume Up Last Week As Rates Inched Down

Posted by Patrick Barnard on March 05, 2014 No Comments
Categories : Residential Mortgage

After suffering through some harsh winter weather during January and February, it would appear that some home shoppers are finally coming out of hibernation.

After declining for three consecutive weeks, mortgage application volume increased 9.4%, on an adjusted basis, during the week ending Feb. 28, compared to the previous week, according to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.

On an unadjusted basis, application volume was up 11% compared with the previous week.

However, due to the impact of the Consumer Financial Protection Bureau's new ability-to-repay/qualified mortgage rules, which will likely result in more applicants being declined for credit, it has become difficult to forecast how the increase in application volume will shake out in terms of originations.

In addition to the increase in applications for purchases, refinance volume increased 10%, on an adjusted basis, from the previous week. However, with applications for purchases increasing at a faster rate, the refinance share of mortgage activity actually decreased to 57.7% of total applications, from 58% the previous week.

The seasonally adjusted Purchase Index – an indicator of incoming application volume – increased 9% from one week earlier. On an unadjusted basis, it increased 12%.

MBA noted in this week's report that the gains experienced last week were not enough to offset the declines seen in recent weeks and months. For example, despite the increase in refinance volume, the Refinance Index was still 3% lower than it was two weeks prior. Similarly, although the seasonally adjusted Purchase Index was 6% higher than its level two weeks earlier, it was still 19% lower than the same week one year ago.Â

According to the report, mortgage interest rates declined slightly last week, which could account for the increase in refinance activity. With rates forecast to rise above 5% before the end of this year, some homeowners may be locking in lower rates now, while they remain historically low.

For the week ending Feb. 28, the average rate for a 30-year fixed-rate mortgage (FRM) with conforming loan balance ($417,000 or less) was 4.47%, down from 4.53% the week prior.

The average rate for a 30-year FRM with jumbo loan balance (greater than $417,000) was 4.37%, down from 4.47% the week prior.

The average rate for a 30-year FRM backed by the Federal Housing Administration was 4.13%, down from 4.17%.

The average rate for a 15-year FRM was 3.52%, down from 3.56%.

Rates for adjustable-rate mortgages (ARMs) declined as well. The average rate for a 5/1 ARM was 3.09%, down from 3.17% the week before. The ARM share of activity remained unchanged at 8% of total applications.

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