After falling 6.4% the previous week, mortgage application volume increased 1.5% on an adjusted basis during the week ended February 21, according to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey.
Applications for refinances decreased 1% while applications for purchases increased 6%.
Total applications have increased in four of the past five weeks, according to the survey.
The decrease in refinance activity came despite a drop in mortgage rates: The average rate for a 30-year fixed-rate mortgage was 3.73%, down from 3.77% the previous week.
Although applications for refinances dropped, they were nonetheless up 152% compared with a year ago.
On an unadjusted basis, total volume decreased 7% compared with the previous week.
Applications for purchases decreased 1%, on an unadjusted basis, but were up 10% compared with the same week one year earlier.
“Last week appears to have been the calm before the storm,” says Mike Fratantoni, senior vice president and chief economist for the MBA, in a statement. “Weaker readings on economic growth caused a slight drop in mortgage rates, bringing them back to their level two weeks ago, but applications overall moved 1.5 percent higher.
“Refinance applications for conventional loans dropped a bit, but FHA refinances increased more than 22 percent,” he says. “Purchase volume remained strong, supported both by low rates and the increased pace of construction over the past few months. With housing supply at low levels, new inventory is a positive development for prospective homebuyers.
“As fears regarding the coronavirus have increased, Treasury yields have dropped to record lows this week amid the ensuing financial market volatility,” he adds. “Next week’s results will show the impact this drop in Treasuries had on mortgage activity.”
The refinance share of mortgage activity decreased to 60.8% of total applications, down from 63.2% the previous week.
The adjustable-rate mortgage (ARM) share of activity decreased to 5.3% of total applications.