Mortgage application volume fell 0.8% on an adjusted basis during the week ended March 24, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey.
Applications for refinances decreased 3% despite a dip in rates, while applications for purchases increased 1%, according to the report.
These figures are in keeping with the current trend: Home purchases are expected to increase through the spring home shopping season, while refinances are expected to decrease due to rising interest rates. A concern for the mortgage banking industry is whether rising interest rates will hold back home purchases. With the exception of a couple of dips in the first quarter, mortgage rates have been on the rise since the presidential election in November. It is anticipated that the Federal Reserve will raise the Fed Funds rate two more times this year, which will ultimately push mortgage rates higher.
On an unadjusted basis, total application volume decreased 0.4% compared with the previous week. Applications for purchases increased 2%, on an unadjusted basis, compared with the previous week and increased 4% compared with the same week one year earlier.
The refinance share of mortgage activity decreased to 44.0% of total applications – down from 45.1% the previous week to reach the lowest level since October 2008.
Interestingly, applications for refinances fell this past week despite the fact that interest rates took another dip. The average rate for a 30-year, fixed-rate mortgage (FRM) was 4.33%, down from 4.46% the previous week, according to the MBA’s data.
The average rate for a 30-year jumbo FRM was 4.26%, down from 4.40%.
The average rate for a 30-year FRM backed by the Federal Housing Administration (FHA) was 4.24%, down from 4.33%.
The average rate for a 15-year FRM was 3.57%, down from 3.68%.
The average rate for a 5/1 adjustable-rate mortgage (ARM) was 3.30%, down from 3.41%.
The ARM share of activity decreased to 8.5% of total applications.
Looking at the government loans, applications for mortgages backed by the FHA represented 10.8% of all applications – down from 10.9% the week prior. The Veterans Affairs share was 11.0%, up from 10.1%, while the U.S. Department of Agriculture share was 1.0%, up from 0.9%.