The volume of mortgage applications rose last week even as some interest rates reached their highest levels in nearly three years.  The Mortgage Bankers Association (MBA) said that its Market Composite Index, viewed on a seasonally adjusted basis, was up 3.1 percent during the week ended March 10.  The index rose 4.0 percent compared to the previous week when unadjusted.

Applications for both refinancing and purchasing contributed to the increase.  The Refinance Index was up 4.0 percent from the week ended March 3.  The seasonally adjusted Purchase Index gained 2.0 percent while the unadjusted Purchase Index increased 3 percent.  The unadjusted Purchase Index was 6 percent higher than the same week in 2015.

Refi Index vs 30yr Fixed

Purchase Index vs 30yr Fixed

The refinance share of activity was also up slightly, rising from 45.4 percent a week earlier to 45.6 percent.  The adjustable-rate mortgage (ARM) portion of activity continued its recent increases, rising to the highest share of total applications since October 2014, 8.2 percent.  The previous week ARMs held a 7.7 percent share.  

Applications for FHA mortgages accounted for 11.1 percent of total applications, down from 11.8 percent a week earlier. The VA share decreased to 11.1 percent from 11.6 percent and the USDA share was unchanged at 0.9 percent.

Contract and effective rates posted significant increases for all fixed-rate mortgages (FRM), while rates for ARM were down.  The average contract interest rate for 30-year FRM with conforming loan balances ($424,100 or less) increased to its highest level since April 2014, 4.46 percent, from 4.36 percent.  Points dropped to 0.37 from 0.44.

Jumbo 30-year FRM, loans with balances greater than $424,100, had the highest average rate since April 2014 as well, rising to 4.44 percent from 4.27 percent.  Points increased to 0.28 from 0.25.

The contract rate for 30-year FRM backed by the FHA averaged 4.29 percent with 039 point.  The previous week the rate was 4.18 percent with 0.32 point. The contract rate was at its highest level since January 2014.

The average contract interest rate for 15-year FRM was 3.66 percent, up 9 basis points week-over-week.  Points increased to 0.45 from 0.36.  

The average contract interest rate for 5/1 ARMs decreased to 3.45 percent from 3.48 percent, with points increasing to 0.24 from 0.20.  The effective rate decreased.  

MBA derives volume and interest rate data from its Weekly Mortgage Applications Survey.  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.  Interest rate information is based on mortgages with 80 percent loan-to-value ratios and points that include the origination fee.