An uptick in the spring home buying market resulted in a surge of mortgage applications during the past week, according to the Mortgage Bankers Association.
The MBA’s seasonally adjusted mortgage application index rose 4.6 percent during the week ended March 27, 2015, with the home purchase applications index jumping 6 percent from the previous week. Home purchase requests were also 8 percent higher than the year before.
“This week’s mortgage application survey falls right into line with recent indications that home sales – new, existing and pending – are on the rise, as is consumer sentiment,” said Lynn Fisher, MBA’s Vice President of research and economics. She added, “the increase in purchase volume was led by a nearly 6% increase …, perhaps signaling that households are finally ready to begin the home-buying season.”
Refinance applications also grew in volume with the refinance index rising 4 percent from the week before and jumping 44 percent from one year earlier.
Refinance activity is closely tied to the direction of mortgage interest rates. Freddie Mac reported that during the same time, the average rate on a 30-year fixed rate conventional mortgage plummeted to 3.69 percent with an average point of 0.6, down from 3.78 percent with the same average point. That drop in rates spurred interest in capitalizing on mortgage savings.
And refinancing still dominates mortgage activity, with refinance applications making up 60 percent of all requests. That is down just slightly from 61 percent the week before.
The MBA also reported that adjustable-rate mortgages continue to decrease in popularity, with the ARM share of activity falling to 5.6 percent of all applications. Government loans saw little change in the latest week with FHA mortgage applications making up 12.8 percent of all requests, down from 13.3 percent and VA loan applications inching up to 10.5 percent from 10.1 percent the previous week.