With the war in Iran causing market volatility this past week including an average mortgage rate increase from below and back up over 6%, home purchase application activity increased for the fourth straight week.
According to the latest Market Composite Index from the Mortgage Bankers Association (MBA)—its measure of mortgage loan activity volume and includes purchases and refinances—increased 3.2% on a seasonally adjusted basis from last week’s notable 11.0% increase, for the week ending March 6. On an unadjusted basis, the Index increased 4.1% compared with the previous week.
“Financial markets were volatile last week amid the ongoing turmoil in the Middle East,” said Mike Fratantoni, MBA’s SVP and chief economist. “Mortgage rates increased on net over the week, while refinance volume was roughly flat. Borrowers in recent weeks were able to get 30-year conforming rates below 6 percent, but with the current volatility, longer-term rates have moved up, pushing up the 30-year fixed rate to 6.19 percent.”
MBA’s Refinance Index increased 0.5% from the previous week and was 81% higher than the same week one year ago. The seasonally adjusted Purchase Index increased 7.8% from one week earlier. The unadjusted Purchase Index increased 9.3% compared with the previous week and was 11% higher than the same week one year ago.
“Purchase activity increased last week, particularly for FHA loans, which moved up more than 11 percent,” Fratantoni added. “The pace of homebuying continues to track ahead of last year’s pace, with overall purchase volume up 10 percent. More inventory on the market is supporting more transactions.”
According to MBA’s data this week, the refinance share of mortgage activity decreased to 57.8% of total applications from 59.8% the previous week. The adjustable-rate mortgage (ARM) share of activity increased 8.9% of total applications.
Government-backed loan activity was mixed overall this week with MBA showing the FHA share of total applications increasing to 17.1% from 15.8% the week prior. The VA share of total applications decreased 16.1% from 17.1% the week prior and the USDA share of total applications remained unchanged at 0.4% from the week prior.
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