After a slight increase in late February, mortgage applications dipped 1.3% in the week ending March 5, according to the latest report from the Mortgage Bankers Association. But experts aren’t concerned.
With spring approaching – signaling the start of a busy buying season – the purchase market sported its strongest showing in four weeks, with gains in both conventional and government applications, according to Joel Kan, MBA’s associate vice president of economic and industry forecasting.
“Loan sizes moderated for the second straight week, which is potentially a sign that more first-time buyers are entering the market,” Kan said. “Signs of faster economic growth, an improving job market and increased vaccine distribution are pushing rates higher. The 30-year fixed mortgage rate climbed to 3.26% last week, which is the highest since last July and up 40 basis points since the start of 2021.”
Rates have been trending upward for more than a month now, jumping above 3% this month for the first time since the summer, when sub-3% rates were the norm. Climbing rates are combining with low inventory and high home prices to keep mortgage applications low, Kan said.
The refinance index decreased 5% from the previous week and was 43% lower than the same week one year ago. The seasonally adjusted purchase index increased 7% from the previous week, as did the unadjusted purchase index, which increased 9%.
The FHA share of total mortgage applications decreased to 11.6% from 12.1% the week prior. The VA share of total mortgage applications decreased to 11.1% from 12.3% the week prior.
Here is a more detailed breakdown of this week’s mortgage application data:
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.26% from 3.23%
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) increased to 3.34% from 3.33% – a second straight week of increases
- The average contract interest rate for 30-year fixed-rate mortgages increased to 3.20% from 3.19%
- The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.63% from 2.64%
- The average contract interest rate for 5/1 ARMs decreased to 2.69% from 2.84%