Mortgage Applications Today: Mortgage Demand Rises for Third Straight Week—Up 11%, Buoyed by Low Rates
Home loan applications rose for the third week in a row—up 11% from the previous week, according to the Mortgage Bankers Association for the week ending Feb. 27. New loans and refinancing contributed to the increase.
The Market Composite Index, a measure of home loan application volume, rose 11% on a seasonally adjusted basis from a week earlier. On an unadjusted basis, the Index increased by 12.1% compared to the previous week.
The Refinance Index increased by 14.3% from last week and was 109% higher than the same week one year ago. The seasonally adjusted Purchase Index rose 6.1% from a week earlier. The unadjusted Purchase Index increased by 8.9% compared to the previous week and was 10% higher than the same week one year ago.
The increase in mortgage applications comes as mortgage interest rates fell into the 5% range for the first time since September 2022. The average rate for a 30-year fixed-rate mortgage fell to 5.98% in the week ending Feb. 26, according to Freddie Mac. That was down from 6.01% last week.
“Loan applications rose last week, driven by continued strength in refinancing activity, as home prices remain near their lowest level since 2022,” it said. Joel KanMBA vice president and deputy chief economist. “Refinancing applications rose for the fourth week in a row to the strongest pace since 2022, while typical refinances rose 20 percent.”
“The increase in the average size of refinancing loans shows that many borrowers with larger loan sizes are looking to lower their monthly payments. Purchase applications also rose, with a weekly pace of about 10 percent ahead of last year’s pace, as low prices and rising levels of housing inventory continue to support home buyer interest,” Kan added.
The refinancing share of mortgage activity rose to 59.8% of total applications from 58.6% last week. The share of adjustable rate mortgages (ARM) for work increased to 8.8% of total applications.
The Federal Housing Administration’s (FHA) share of total applications fell to 15.8% from 16.1% last week. The share of veteran loan applications fell to 17.1% from 18.7% last week. USDA’s share of total applications remained unchanged at 0.4%.
Contract prices
The average interest rate on a 30-year fixed-rate mortgage with a loan balance ($832,750 or less) was unchanged from last week at 6.09%, down 0.52 basis points from 0.53 (including down payment) at 80% loan-to-value (LTV). The effective level remained the same as last week.
The average 30-year contract interest rate for fixed-rate mortgages with jumbo loan balances (over $832,750) decreased to 6.16% from 6.20%, with a percentage decrease to 0.31 from 0.42 (including down payment) for 80% LTV loans. The active rate has decreased since last week.
The average 30-year fixed rate mortgage backed by FHA was unchanged from last week at 5.97%, a point down to 0.62 from 0.65 (including down payment) for an 80% LTV loan. The active rate has decreased since last week.
The average interest rate for a 15-year fixed-rate mortgage increased to 5.49% from 5.48%, points decreased to 0.60 from 0.70 (including down payment) for an 80% LTV loan. The active rate has decreased since last week.
The average contract interest rate for 5/1 ARMs increased to 5.32% from 5.23%, with a percentage point increase to 0.51 from 0.41 (including down payment) for 80% LTV loans. The active rate has increased since last week.
Mortgage rates are calculated
Loan rates are calculated based on various factors in the economy, and the length of your loan will also factor into the loan amount you qualify for.
The average 30-year mortgage is tied to the 10-year Treasury note yield, according to Fannie Mae. As the yield on the 10-year Treasury note moves, mortgage rates follow.
The yield on the 10-year Treasury note is determined by expectations of short-term interest rates in the economy over the bond’s term, as well as short-term interest rates.
