After declining steadily for six straight weeks, applications for mortgage refinancing reversed direction and drove the Mortgage Bankers Association's (MBA) seasonally adjusted Market Composite Index up 4.8 percent last week.  The index, a measure of loan applications volume derived from a weekly survey by MBA, rose 5.0 percent on an unadjusted basis during the week ended March 30 as compared to the week ended March 23.

The Refinance Index increased 4.0 percent from the previous week, the first uptick in the index since the week ended February 22.  The seasonally adjusted Purchase Index increased 7.2 percent to its highest level since December 2, 2011 and the unadjusted version rose 7.6 percent and was 2.4 percent higher than the same week one year earlier.  Despite the increase in the Refinance Index, the refinancing share of total mortgage applications was down to 71.2 percent from 71.9 percent, the lowest share since last July.

The four week moving average for the seasonally adjusted Market Index was down 2.07 percent and the Refinance Index fell 3.73 percent.  The moving average for the seasonally adjusted Purchase Index was up 3.48 percent.

"Applications to buy a home picked up last week, and are running more than two percent above the level reported at this time last year.  Home purchase applications for conventional loans are now about 10 percent above last year's level," said Michael Fratantoni, MBA's Vice President of Research and Economics.  "Applications for government loans increased by more than 10 percent over the week, for both purchase and refinance, likely spurred by borrowers seeking to apply before scheduled increases in FHA mortgage insurance premiums at the beginning of April." 

Purchase Index vs 30 Yr Fixed

Refinance Index vs 30 Yr Fixed

Mortgage rates dropped after several weeks of increases and the effective rate of all products also declined.  The average contract interest rate for a 30-year fixed-rate mortgage (FRM) with a conforming balance of $417,500 or less decreased from 4.23 percent with 0.45 point to 4.15 percent with 0.43 point.   

The rate for 30-year FRM with jumbo loan balances (greater than $417,500) fell 8 basis points to 4.46 percent with points increasing to 0.49 from 0.46 and the rate for 30-year FRM backed by FHA decreased to 3.89 percent with 0.58 point from 3.96 percent with 0.52 point.  Interest rates for 15-year FRM averaged 3.40 percent with 0.41 point compared to 3.50 percent, with 0.42 point the previous week 

The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) decreased to 2.93 percent from 3.00 percent, with points decreasing to 0.35 from 0.42. The adjustable-rate mortgage (ARM) share of activity increased to 5.5 percent from 5.4 percent of total applications from the previous week.

All interest rate data is based on loans with an 80 percent loan-to-value ratio and points include the origination fee.

During the month of February 85.8 percent of home purchase applications were for 30-year FRM, 6.6 percent were for 15-year FRM, and 5.9 percent were for ARMS.  Applications for fixed rate mortgages with amortization schedules other than 15 or 30-year terms represented 1.7 percent of all purchase applications.

MBA's weekly 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.