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Healthy application volume could spell strong buying season

A streak of robust mortgage-application numbers has the Mortgage Bankers Association (MBA) optimistic about the upcoming homebuying season.

The MBA’s market composite index, which measures mortgage-application volume, rose 2.3 percent (seasonally adjusted) week over week for the seven-day period ending March 8, 2019. On an unadjusted basis, the index increased by 3 percent.

Movement was driven by the purchase-index component, which increased 4 percent on a seasonally adjusted basis from the prior week. Unadjusted, the purchase index was up 6 percent week over week and 2 percent year over year.

"Led by a 5.5 percent increase in FHA loan applications, purchase activity picked up last week and was almost 2 percent higher than a year ago," said Joel Kan, MBA's associate vice president of economic and industry forecasting.

"Purchase applications have now increased year over year for four weeks, which signals healthy demand entering the busy spring buying season. However, the pickup in the average loan size continues, with the average balance reaching another record high. With more inventory in their price range compared to first-time buyers, move-up and higher-end buyers continue to have strong success finding a home."

The MBA's refinance index decreased 0.2 percent from the previous week. The refinance share of mortgage activity also retreated, landing at 38.6 percent of total applications, down from 40 percent one week earlier. The adjustable-rate mortgage (ARM) share decreased to 7.2 percent of total applications.

Federal Housing Administration (FHA) share of total applications rose to 10.4 percent, up from 10.3 percent the week prior. For U.S. Department of Veterans Affairs (VA) loans, the share of total applications fell from 10.4 percent the week prior to 10.2 percent. And, for U.S. Department of Agriculture (USDA) loans, the share of total applications was flat at 0.6 percent.

The average interest rate for 30-year fixed-rate mortgages (FRMs) with conforming loan balances decreased from 4.67 percent to 4.64 percent, with points increasing from 0.44 to 0.47 (including the origination fee) for 80 percent loan-to-value (LTV) loans.

The average interest rate for 30-year jumbo FRMs increased from 4.41 percent to 4.45 percent. The average interest rate for 30-year FHA FRMs decreased from 4.66 percent to 4.61 percent.

The average interest rate for 15-year FRMs fell from 4.08 percent to 4.02 percent. The average interest rate for 5/1 ARMs inched up from 4.08 percent to 4.09 percent.


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