February's increase in mortgage interest rates took some of the heat out of the refinancing boom, ""Capital Economics"":https://www.capitaleconomics.com/ says in its latest _US Housing Data Response_.
[IMAGE]Capital Economics' report, which compiles application data from the ""Mortgage Bankers Association"":http://www.mortgagebankers.org/default.htm (MBA), shows application volume fell 0.3 percent month-over-month in February. That decline, however, is still an improvement over January, which saw a 2.5 percent drop in applications from December.
Purchase applications gave up the most ground last month, falling 2.1 percent from January and interrupting a ""fairly encouraging run"" of increases that lasted five months. Year-over-year, however, purchase volume was up 14.1 percent.
Refinance application volume, meanwhile, fell 0.8 percent from January to February. Volume also dropped year-over-year for the first time since 2011, according to Capital Economics.
""[T]he bottom line is that, on the MBA measure, it still looks like the mortgage-dependent buyers are making only a marginal contribution to the housing recovery,"" the report reads. ""But other sources, such as the Fed's Flow of Funds, show mortgage lending picking up. It's possible that the MBA figures will stage a more sustained recovery later this year.""
February's decline in applications shadowed a rise in interest rates, which increased to a six-month high of 3.76 percent. While rates have been on the rise since the end of 2012--following analysts' expectations--Capital Economics says it isn't convinced that the market has seen a trough in rates yet.
""After all, without a fundamental solution to the problems in the euro-zone, bouts of safe-haven demand will keep up the pressure on Treasury yields,"" the firm explains.
Meanwhile, MBA released the results of its Weekly Mortgage Applications Survey for the week ending March 1. According to the survey's Market Composite Index, application volume increased 14.8 percent on an unadjusted basis and 15 percent on an unadjusted basis.
MBA's Refinance Index increased 15 percent last week, rising to its highest level since mid-January. The refinance share of mortgage activity was essentially unchanged, however, keeping at 77 percent.
The seasonally adjusted Purchase Index also increased, jumping 15 percent week-over-week (keeping in line with Capital Economics' expectations) to its highest level in a month. The unadjusted index was up 18 percent.
The rise in activity accompanied a decline in interest rates; according to MBA's measures, the average contract interest rate for a 30-year fixed-rate mortgage was 3.70 percent, a drop from 3.77 percent the week before and the lowest average rate since the week ending January 25.