Mortgage applications increased for the week ending Feb. 24, according to new research from the Mortgage Bankers Association. The Market Composite Index, which measures mortgage loan application volumes, jumped 5.8 percent for the week, Presidents' Day included. The Refinance and adjusted Purchase indices experienced similar surges, increasing 5 percent and 7 percent, respectively. Unadjusted, the Purchase Index fell 1 percent.
FHA loans increase while refinancing falls
Refinanced mortgages accounted for roughly 45 percent of all applications, a slight decrease compared to figures from the prior week. Adjustable-rate mortgages remained steady, constituting just over 7 percent of applications. The number of home loans taken through the Federal Housing Administration grew to account for more than 12 percent of filings. Mortgages associated with the Department of Agriculture went unchanged, changing in at 0.9 percent.
Mortgages taken out via the Department of Veterans Affairs suffered a slight drop, falling to 11.7 percent.
These developments demonstrate the strong demand for housing nationwide, as prospective buyers, emboldened by economic growth, test the market. Recent new-home sales data corroborates this trend. Sales for newly constructed single-family homes jumped significantly in January, according to the Department of Commerce.
Meanwhile, interest rates fell across the board. The average rate for 30-year fixed-rate mortgages dropped to 4.3 percent. The average rate for 30-year FRMs with jumbo balances slid to 4.23 percent. And, the average rate for FHA-backed 30-year FRMs decreased to 4.07 percent. The average rate for 15-year fixed mortgages declined to 3.51 percent. However, interest rates for adjustable-rate mortgages ticked upwards to 3.35 percent.
Analysts at the MBA have pegged this decline to changing investment strategies, CNBC reported. With political uncertainty at home and abroad, traders embraced bonds and catalyzed a decrease in interest rates. However, real estate experts suspect these numbers could soon rise. On Tuesday Feb. 28, multiple Federal Reserve Bank presidents threw their support behind another rate hike, highlighting the need for "monetary tightening." Indeed, the 10-year Treasury bond, which normally drives mortgage rate movement, increased soon after these remarks went public.
Many in the industry now believe an increase could come later this month following the meeting of the Federal Open Market Committee, which takes place March 14-15.
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