Mortgage Applications Fell But Spring Home Buying Season Still Looks Good

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After increasing the previous two weeks, mortgage application volume fell 2.5% on an adjusted basis during the week ended February 22, according to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey.

The drop coincided with a slight increase in mortgage interest rates: The average rate for a 30-year fixed-rate mortgage was 4.67%, up from 4.65% the previous week.

Applications for refinances decreased 2% while applications for purchases decreased 3%.

The results include an adjustment for the Washington’s Birthday (Presidents’ Day) holiday.

On an unadjusted basis, total volume increased 10% compared with the previous week. Applications for purchases increased 11, on an unadjusted basis, and were 1% higher compared with the same week one year earlier.

“Slightly higher mortgages rates last week led to a decrease in application volume,” says Mike Fratantoni, senior vice president and chief economist for the MBA, in a statement. “Furthermore, the average loan size for purchase applications increased to a record high, led by a rise in the average size of conventional loans. This suggests that move-up and higher-end buyers have so far become a greater share of the spring market.

“Overall, conventional purchase loans are up 2.1 percent relative to last year, indicating that homebuyers continue to be inspired by the stable rate environment and the modest increase in housing supply,” he adds.

The refinance share of mortgage activity decreased to 40.0% of total applications, down from 40.4% the previous week.

The adjustable-rate mortgage (ARM) share of activity increased to 7.4% of total applications.

The average rate for a 5/1 adjustable-rate mortgage was 4.08%, up from 3.95%.

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