Mortgage applications increased last week, rising by 9.7% from the previous week, according to the Mortgage Bankers Association.
The increase follows three weeks of declining numbers.
The Market Composite Index, a gauge of mortgage loan application volume, surged by 9.7% on a seasonally adjusted basis from the prior week. On an unadjusted basis, the index soared by 12% compared to the previous week. Notably, the Refinance Index also climbed, marking an 8% increase from the prior week, although it was slightly lower compared to the same week last year.
First-time homebuyers were particularly active, driving the surge in mortgage applications, especially for FHA loans. The seasonally adjusted Purchase Index spiked by 11% from the previous week, indicating robust demand in the housing market despite lingering concerns about inflation and rising mortgage rates.
"The latest data on inflation was not markedly better nor worse than expected, which was enough to bring mortgage rates down a bit, with the 30-year fixed mortgage rate declining slightly last week to 7.02 percent,” MBA’s SVP and Chief Economist Mike Fratantoni said. “Mortgage applications were up considerably relative to the prior week, which included the President's Day holiday."
He added: "Other sources of housing data are showing increases in new listings, which is a real positive for the spring buying season given the lack of for-sale inventory."
The data also revealed a slight decrease in the refinance share of mortgage activity, dropping to 30.2% of total applications from the previous week's 31.2%. However, the adjustable-rate mortgage (ARM) share of activity increased to 7.7% of total applications.
Despite the overall increase in mortgage applications, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances dipped slightly to 7.02% from 7.04% in the previous week. Similarly, other loan types experienced minor fluctuations in interest rates, with some decreasing and others remaining unchanged.
The housing market's response to these slight shifts in rates suggests optimism among homebuyers, with many eager to capitalize on the upcoming spring buying season, even as rates remain relatively high compared to historical averages.
