A hike in insurance premiums for FHA backed loans sent purchase-only mortgage applications up 10% last week, driving mortgage application volume up 5.3% on a seasonally adjusted basis, the Mortgage Bankers Association reported Wednesday. Rates fell as well.
"Purchase application volume jumped last week largely due to another sharp increase in applications for government loans," said said Michael Fratantoni, MBA's vp of research and economics. "Borrowers were likely motivated to apply for loans before the scheduled increase in FHA insurance premiums. Refinance activity increased somewhat, as rates dropped to their lowest level in a month towards the end of the week."
The Refinance Index increased 2.7% from the previous week. The 10.0% gain in the seasonally adjusted Purchase Index was driven 17.6% increase in purchase applications for government-backed loans. The unadjusted Purchase Index increased 10.9% from the previous week but was still 11.4% lower than the same week a year ago.
The four week moving average for the seasonally adjusted Market Index was down 2.9%. The four week moving average was up 2.5% for the seasonally adjusted Purchase Index, while this average was down 5.7% for the Refinance Index.
The refinance share of mortgage activity decreased to 58.5% from 60.3%, the lowest refinance share since May 7, 2010. The adjustable-rate mortgage (ARM) share of activity increased to 6.5% from 5.9% of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.83% from 4.98%, with points increasing to 1.07 from 0.93. The rate for 15-year fixed-rate mortgages decreased to 4.07% from 4.17%, with points decreasing to 1.02 from 1.22.