Purchase Application Demand Moves Higher

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Demand for loans to buy homes moved higher last week, according to the Mortgage Bankers Association’s Weekly Applications Survey. The 2 percent increase means purchase application demand is now 27 percent higher than it was at the same time last year. That is significant because mortgage loan demand is typically a good indicator of future home sales – so the improvement could indicate a strong upcoming spring sales season. Overall, mortgage application demand fell 4.3 percent, however, due to a drop in refinance activity. Average mortgage rates were up across all loan categories, including 30-year fixed-rate mortgages with both jumbo and conforming balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. The rate increase caused the number of borrowers seeking to refinance to fall 8 percent. Michael Fratantoni, MBA’s chief economist, said the decline was mostly seen on loans with higher balances. “The dollar volume of refinance applications decreased by 26 percent, while refinance applications based on loan count decreased 17 percent, indicating that the volume of larger loans dropped to a greater extent than smaller loans,” Fratantoni told CNBC. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

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