Mortgage applications drop after weeks of growth

The Market Composite Index, which measures mortgage loan application volume, decreased 6.2% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the index decreased 6% from last week.

The refinance index decreased 13% from the previous week, but was 70% higher than the same week one year ago. The seasonally adjusted purchase index increased 0.1% from one week earlier, while the unadjusted purchase index increased 1% compared with the previous week and was 6% higher than the same week one year ago.

“Mortgage rates increased for the first time in nine weeks, with the 30-year fixed rate rising to 6.72%. This increase in rates led to a decrease in refinance volume. However, purchase application volume inched up to its highest level in six weeks, led by a 3% increase in FHA purchase applications,” said Mike Fratantoni, MBA’s senior vice president and chief economist.

Fratantoni continued, “Overall, purchase application volume is up 6% compared to last year at this time. Growing inventories of homes on the market and steadier mortgage rates are supporting homebuying activity thus far this spring.”

The refinance share of mortgage activity decreased to 42.0% of total applications from 45.6% the previous week. Meanwhile, the adjustable-rate mortgage (ARM) share of activity decreased to 6.7% of total applications.

By product, the FHA share of total applications increased to 16.5% from 16.1% the week before and the VA share of total applications decreased to 14.6% from 15.9% last week. The USDA share of total applications remained unchanged at last week’s 0.4%.

Mortgage rates saw increases across the board. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances increased to 6.78% from last week’s 6.68%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 6.40% from 6.34%, whereas interest rates for 15-year fixed-rate mortgages increased to 6.08% from 6.04%.

Interest rates for 5/1 ARMs increased to 5.84% from 5.81%.