By Mike Colpitts
Driven by a drop in mortgage rates, home loan activity rose for the first time in five weeks for the week ending March 30th, according to the Mortgage Bankers Association. The purchase index led the market higher in applications for home loans.
The bankers seasonally adjusted purchase index jumped 7.2% for the week, indicating a sharp rise in applications for mortgages by consumers seeking financing to buy homes. Refinancing also showed an improvement, increasing 4.0% from the prior week, but refinances compose the lowest share of home loan activity since last July, making up 71.2% of applications.
“Applications to buy a home picked up last week, and are running more than 2% above the level reported at this time last year,” said MBA Vice President of Research and Economics Michael Fratantoni. “Home purchase applications for conventional loans are now about 10% above last year’s level.”
Loan applications for government insured mortgages increased by more than 10% for both purchases and refinances, driven by mortgage borrowers applying before scheduled increases in FHA mortgage insurance premiums went into effect at the beginning of April.
A jump in mortgage rates the prior week fell during this past week, pushing consumers to lock-in rates that were lower. The average contract interest rate for the 30-year conventional fixed rate mortgage signed by borrowers decreased to 4.16% from 4.23% for the week, according to the bankers’ survey.
The Mortgage Bankers Association survey accounts for about 75% of all home mortgages applied for in the U.S.
FHA home loans, however, which are gaining in popularity, averaged 3.89% on the 30-year fixed rate for the week, declining from 3.96% a week earlier. The rate on the 15-year fixed loan finalized by consumers dropped to an average of 3.40% from 3.50%. The contract average rate on the 5/1 adjustable rate mortgage fell to 2.93% from 3.00%.