Mortgage applications surge as rates fall

WASHINGTON – Residential mortgage applications last week rose 11.3 percent compared with the week before, and 5.7 percent compared with a year ago, according to the latest data from the Mortgage Bankers Association.
In the week ended March 6, the trade group’s seasonally adjusted Market Composite Index – a measure of overall mortgage loan-application volume – rose to 723.4 points (March 16, 1990 = 100 points) from 649.7 points in the week ended Feb. 27. That put the index 81.48 percent above its eight-year low of 398.6 points in the week ended Nov. 15.
The MBA survey, conducted weekly since 1990, covers about half of all U.S. retail home mortgage applications.
The trade group’s seasonally adjusted Purchase Index last week rose to 253.3 points, a 7.1 percent increase from its 236.4-point reading in the week ended Feb. 27. Applications to purchase a home using Federal Housing Authority (FHA) and other government-backed loans rose 10.4 percent last week, while applications for non-government-backed loans rose 5.4 percent, the MBA added.
The Refinance Index rose 13.3 percent last week to 3,470.7 points – or 48.65 percent below the five-year high of 6,758.6 recorded in the week ended Dec. 19 – from the preceding week’s level of 3,063.4. Refinancing was the goal of 67.9 percent of loan applications last week, up from 66.9 percent in the final week of February.
The share of mortgage applicants who were seeking adjustable-rate mortgages (ARMs) – rather than conventional fixed-rate loans – was unchanged last week at 2.3 percent of total applications.
The average contract interest rate for a 30-year, fixed-rate mortgage fell to 4.96 percent last week – the second-lowest rate since the series began in 1990, after the record 4.89 percent recorded this year in the week ended Jan. 9, the MBA said – from the preceding week’s 5.14 percent. The average rate on a 15-year, fixed-rate loan dropped to 4.54 percent from the previous 4.73 percent. But the contract rate on a one-year ARM rose to 6.21 percent from the preceding week’s 6.13 percent average.
Still, “we’re not seeing any underlying pickup in demand for homes,” Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, told Bloomberg News. Government efforts to stem foreclosures “may help cushion the housing slump,” he added, “but they won’t yet spur a recovery.”
President Barack Obama’s administration recently pledged $275 billion for programs to help first-time buyers enter the housing market – with an $8,000 federal tax break – as well as helping distressed borrowers to keep their homes.
The Mortgage Bankers Association is a trade group representing the real estate finance industry. Its 3,000 member companies include mortgage firms, commercial banks, thrifts, life insurance companies and others. Additional information, including the MBA’s Weekly Application Survey, is available at www.MortgageBankers.org.