A sharp drop in refinance application volume last week more than offset a pickup in purchase applications, resulting in a net loss, the Mortgage Bankers Association (MBA) reported in its Weekly Mortgage Applications Survey.
MBA’s Market Composite Index, a measure of mortgage application volume, dropped 3.5 percent on a seasonally adjusted basis for the week ending March 21. The decline followed a revised 0.2 percent increase (originally reported as a 1.2 percent decrease) the week prior.
Unadjusted, the index fell 3 percent week-over-week.
In purchase volumes, MBA detected a 3 percent increase on a seasonally adjusted basis, driven largely by a 4.0 percent gain in conventional purchase applications (compared to government share, which was mostly flat). The unadjusted Purchase Index also climbed 3 percent week-over-week but settled 17 percent lower than the same week last year.
On the other hand, the Refinance Index plummeted 8 percent compared to the previous week, including an 8.1 percent drop in conventional refinance applications and a 5.8 percent decline in government refinances—the latter decline bringing government refinance applications down to their lowest level since July 2011.
The refinance share of total mortgage activity for the week was 54 percent, the lowest since April 2010.
Contributing to the drop in refinance demand was an increase in mortgage rates to their highest point since January. According to MBA’s metrics, the average rate for a 30-year fixed-rate mortgage rose to 4.56 percent, with points increasing to 0.29 from 0.26 (including the origination fee) for 80 percent loan-to-value ratio mortgages.