Mortgage applications increased for a third straight week—11% from the week prior, according to the Mortgage Bankers Association for the week ending Feb. 27. New home loans and refinancing contributed to the increase.
The Market Composite Index, a measure of mortgage loan application volume, increased 11% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 12.1% compared with the previous week.
The Refinance Index increased 14.3% from the previous week and was 109% higher than the same week one year ago. The seasonally adjusted Purchase Index increased 6.1% from one week earlier. The unadjusted Purchase Index increased 8.9% compared with the previous week and was 10% higher than the same week one year ago.
The increase in mortgage applications comes as mortgage interest rates fell into the 5% range for the first time since September 2022. The average rate on a 30-year fixed home loan plunged to 5.98% for the week ending Feb. 26, according to Freddie Mac. That’s down from 6.01% a week earlier.
“Mortgage applications increased last week, driven by continued strength in refinance activity, as mortgage rates stayed near their lowest level since 2022,” said Joel Kan, MBA’s vice president and deputy chief economist. “Refinance applications increased for the fourth straight week to the strongest pace since 2022, with conventional refinances up 20 percent.”
“The increase in the average loan size for refinances indicates that more borrowers with larger loan sizes are seeking to lower their monthly payments. Purchase applications also moved higher, with the week’s pace almost 10 percent ahead of last year’s pace, as lower rates and growing levels of housing inventory continue to support homebuyer interest,” Kan added.
The refinance share of mortgage activity increased to 59.8% of total applications from 58.6% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 8.8% of total applications.
The Federal Housing Administration (FHA) share of total applications decreased to 15.8% from 16.1% the week prior. Veterans Affairs loans share of total applications decreased to 17.1% from 18.7% the week prior. The USDA share of total applications remained unchanged at 0.4%.
Contract rates
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($832,750 or less) was unchanged from last week at 6.09%, with points decreasing to 0.52 from 0.53 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate remained the same as last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $832,750) decreased to 6.16% from 6.20%, with points decreasing to 0.31 from 0.42 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA was unchanged from last week at 5.97%, with points decreasing to 0.62 from 0.65 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages increased to 5.49% from 5.48%, with points decreasing to 0.60 from 0.70 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The average contract interest rate for 5/1 ARMs increased to 5.32% from 5.23%, with points increasing to 0.51 from 0.41 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
Mortgage rates calculated
Mortgage rates are calculated by various factors in the economy, and the length of your loan will also figure into the mortgage rate you qualify for.
The 30-year mortgage rate is tied to the yield of the 10-year Treasury note, according to Fannie Mae. As the yield on the 10-year Treasury note moves, mortgage rates follow.
The yield on the 10-year Treasury note is determined by expectations for shorter-term interest rates in the economy over the duration of a bond, plus a term premium.
