Mortgage applications rose 8.5% on a seasonally adjusted basis during the week ended March 4, as mortgage rates dropped for the first time in 12 weeks on jitters related to Russia’s invasion of Ukraine, the Mortgage Bankers Association said, citing its Market Composite Index.
The average contract interest rate for 30-year fixed-rate mortgages backed by the Federal Housing Administration decreased to 4.12% from 4.15%, and the rate for conforming 30-year mortgages of $647,200 or less slid to 4.09% from 4.15%.
The average contract interest rate for 30-year fixed- mortgages with jumbo loan balances of more than $647,200 fell to 3.79% from 3.88%, and the average contract interest rate for a 15-year fixed-rate mortgage decreased to 3.39% from 3.47%.
On an unadjusted basis, the market composite index, which measures mortgage-loan application volume, increased 10%. The refinance index, meanwhile, jumped 9% from the previous week and was down 50% from the same week a year ago. The refinance share of mortgage activity decreased to 49.5% of total applications from 49.9% the previous week.
The seasonally adjusted purchase index rose 9% from the previous week, while the unadjusted purchase index climbed 11% and was 7% lower than one year ago.
“A 6-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,” MBA associate vice president of economic and industry forecasting Joel Kan said in a press release. “Looking ahead, the potential for higher inflation amidst disruptions in oil and other commodity flows will likely lead to a period of volatility in rates as these effects work against each other.”
The adjustable-rate mortgage share of activity decreased to 5.2% of total applications. The FHA share of total applications increased to 8.7% from 8.6% the week before, while the VA share of total applications increased to 10.4% from 10.2%. The USDA share of total applications increased to 0.5% from 0.4% the preceding week.
“Purchase activity also increased, as prospective buyers acted on lower rates and the early start of the spring buying season,” Kan noted. “The average loan size remained close to record highs, with higher-balance loan applications continuing to dominate growth.”