Mortgage activity increases as interest rates drop for the first time in months
A drop in mortgage rates – which is likely temporary, according to experts – has put an end to the four-week streak of declines in new mortgage applications, the Mortgage Bankers Association reported Wednesday.
MBA’s Market Composite Index – a measure of home loan application volume – rose 8.5% for the week ending March 04 on a seasonally adjusted basis and was up by 10% on an unadjusted basis.
Applications increased sequentially as mortgage rates fell for the first time in 12 weeks due to the Russia-Ukraine war pushing US Treasury yields lower, said Joel Kan, MBA’s associate vice president of economic and industry forecasting.
Both refinance, and purchase applications jumped 9% from the previous week. The refi share of total applications dropped from 49.9% to 49.5% due to increased purchase activity.
“A six-basis-point decline in the 30-year fixed-rate mortgage led to a slight rebound in total refinance activity, with a larger gain in government refinances. Looking ahead, the potential for higher inflation amid disruptions in oil and other commodity flows will likely lead to a period of volatility in rates as these effects work against each other,” said Kan.
“Purchase activity also increased, as prospective buyers acted on lower rates and the early start of the spring buying season. The average loan size remained close to record highs, with higher-balance loan applications continuing to dominate growth.”