Both mortgage applications and interest rates moved sharply during the week ended March 1.  The Mortgage Bankers Association (MBA) reported that its Market Composite Index, a measure of mortgage application volume, increased 14.8 percent on a seasonally adjusted basis from the previous week and 15 percent unadjusted.  At the same time interest rates dropped, some by double digits. 

The Refinance Index increased 15 percent to its highest level since mid-January although the refinancing share of applications remained unchanged at 77 percent.  The seasonally adjusted Purchase Index increased 15 percent as well and the unadjusted Purchase Index was up 18 percent compared to the week ended February 22 and was 17 percent higher than the same week in 2012.

Purchase Index vs 30 Yr Fixed

Refinance Index vs 30 Yr Fixed

Effective rates as well as contract rates were down for all products covered by MBA's Weekly Mortgage Application Survey.  The average contract rate for 30-year fixed-rate mortgages (FRM) with conforming loans balances ($417,500) decreased to 3.70 percent with 0.39 point from 3.77 percent with 0.48 point.  This was the lowest rate for the conforming 30-year since January 25. 

The contract rate for 30-year FRM with balances over $417,500) fell 13 basis points to 3.80 percent with points unchanged at 0.37.

FHA-backed 30-year FRM rates decreased to 3.47 percent from 3.54 percent and points decreased to 0.33 from 0.41. 

The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.96 percent from 3.03 percent, the lowest contract rate since the week ending January 25, 2013, with points increasing to 0.36 from 0.34.

The rate for 5/1 adjustable rate mortgages (ARMs) averaged 2.55 percent, 10 basis points below the rate the previous week.  Points increased to 0.37 from 0.36.  As has been the case for months, ARMs had about a 4 percent share of mortgage applications.

All rates quoted are for loans with an 80 percent loan-to-value ratio and points include the originations fee.

The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted since 1990.  Respondents include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100.