For the week ending March 24, there was a 2.9% increase in home loan application volume reported by the Mortgage Bankers Association.
The market composite index of MBA experienced a 2.9% rise on a seasonally adjusted basis compared to the previous week, while it was up by 3% on an unadjusted basis. This increase coincided with a drop in the 30-year fixed-rate mortgage to 6.45%, marking the lowest rate in over a month.
According to Joel Kan, the deputy chief economist of MBA, the increase in application activity can be attributed to the third consecutive weekly decline in mortgage rates. Despite the 30-year fixed rate being significantly higher compared to last year by 1.65 percentage points, homebuyers still showed interest, leading to a fourth consecutive increase in purchase applications.
Despite being 35% lower compared to the same period last year, the seasonally adjusted purchase index saw a slight increase of 2% on a weekly basis. Kan mentioned that the deceleration of home price growth across the nation has contributed to enhancing buyers’ purchasing power.
He stated that despite purchase applications still being more than 30% below last year’s figures, the recent rise in applications, along with other data indicating a rise in home sales, is an encouraging development.
Compared to the previous week, refi applications saw a 5% increase, resulting in the refinance share of mortgage activity climbing up five basis points to 29.1% of total applications. Simultaneously, the proportion of adjustable-rate mortgage (ARM) activity decreased to 7.7% of overall applications.
Kan pointed out that although refinance activity saw an increase last week, it still lagged behind last year’s figures by 61%. He added that the majority of homeowners already have mortgage rates that are considerably lower than current rates, hence only a limited number of borrowers would find refinancing to be a viable option.