Applications for mortgage purchases and refinancings jumped as rates dipped below 7 percent for the week ending on March 8, according to the weekly Mortgage Bankers Association survey.
Virtually every indicator of activity rose from the previous week, after rates dropped from 7.02 percent to 6.84 percent, roughly 100 basis points below the fall’s rate peak.
Purchase-loan applications increased 5 percent on a seasonally adjusted basis from the previous week. On an unadjusted basis, it rose 6 percent from the preceding week, though it was still 11 percent below the levels of a year ago.
The refinancing index, meanwhile, increased 12 percent from the previous week and 5 percent from the same week last year. MBA chief economist Mike Fratantoni attributed the refinancing activity to those who were trying to get better deals on loans taken at higher rates in recent years, noting that refinancing activity relatively “remains quite low.”
Nevertheless, whether it’s a matter of perception or not, a rate with the number “6” in front of it is much more inviting than a rate with the number “7” in front of it. Fratantoni said the rates slid “because of incoming economic data showing a weaker service sector and a less robust job market.”
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The refinancing share of total activity increased from 30.2 percent the prior week to 31.6 percent last week. The FHA share of applications decreased from 12.7 percent to 12 percent, while the VA share increased from 11.4 percent to 12.2 percent and the USDA share held at 0.5 percent.
The average contract interest rate for a 30-year rate with jumbo loan balances (greater than $766,550) increased 17 basis points to 7.04 percent, while the average contract interest rate for a 15-year fixed-rate mortgage fell from 6.66 percent to 6.37 percent.