Increase comes as the 30-year fixed mortgage hits lowest level in two months
Mortgage applications posted a 5.3% increase for the week ending April 7, according to data from the Mortgage Bankers Association’s (MBA) latest survey.
Home loan application volume grew 5.3% week over week on a seasonally adjusted basis and up 6% on an unadjusted basis. The steady increase in application activity comes as long-term mortgage rates fall from record highs.
“Incoming data last week showed that the job market is beginning to slow, which led to the 30-year fixed rate decreasing to 6.30% – the lowest level in two months,” said Mike Fratantoni, MBA’s senior vice president and chief economist.
Fratantoni noted last week that the March jobs report showed a labor market that is “still quite strong but beginning to flag, lagging other indicators of a slowing economic activity and tightening credit.” MBA expects the unemployment rate to rise to 4.8% by the end of the year.
MBA’s refinance index edged up one basis point from the previous week, and the purchase index rose 8% from one week earlier. However, the refinance share of mortgage activity dropped from 28.6% to 27% of total applications. The adjustable-rate mortgage share also decreased to 6% of total applications.
“Prospective homebuyers this year have been quite sensitive to any drop in mortgage rates, and that played out last week with purchase applications increasing by 8%,” Fratantoni said. “Refinance application volume was a mixed bag with total volume essentially flat, conventional volume down for the week, but VA refinance volume increasing. The level of refinance activity remains almost 60% below last year, as most homeowners are currently locked in at much lower rates.”
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