Inman News

Purchase mortgage applications were up 1% during the week ending March 25.

Demand for purchase mortgages held steady last week even in the face of rising mortgage rates — an auspicious sign heading into the spring homebuying season.

A weekly survey released Wednesday by the Mortgage Bankers Association showed applications for purchase mortgages during the week ending March 25 were up a seasonally adjusted 1 percent from the week before.

Demand for purchase loans was down 10 percent from a year ago. But given the recent rise in rates and continued inventory shortages, the latest trends in mortgage applications were still seen as a positive by MBA Chief Economist Mike Fratantoni.

“Even with the ongoing climb in rates, purchase application volumes were little changed last week,” Fratantoni said in a statement. “This is particularly auspicious, as we are now in the beginning of the spring homebuying season, and those shopping for homes are struggling with not only higher and more volatile mortgage rates, but also an ongoing shortage of homes on the market.”

With rates on 30-year fixed-rate mortgages continuing an upward march toward 5 percent last week, the MBA’s Weekly Mortgage Applications survey showed requests to refinance were down 15 percent week over week, and 60 percent from a year ago.

Given those hurdles, Fratantoni said “it appears to be promising news that purchase application volume has not declined, as many potential buyers are likely feeling the squeeze in their purchasing power from the jump in rates.”

Borrowers may soon get a reprieve from this year’s relentless rise in mortgage rates, which has largely been driven by fears that the Federal Reserve will continue monetary policy tightening to rein in inflation.

Those fears eased somewhat this week, with 10-year Treasury yields and 30-year mortgage rates retreating Tuesday as Ukraine ceasefire talks eased worries about inflation.

For the week ending March 25, the Mortgage Bankers Association reported average rates for the following types of loans:

• For 30-year fixed-rate conforming mortgages (loan balances of $647,200 or less), rates averaged 4.80 percent, up from 4.50 percent the week before. Although points decreased to 0.56 from 0.59 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans, the effective rate also increased.
• Rates for 30-year fixed-rate jumbo mortgages (loan balances greater than $647,200) averaged 4.40 percent, up from 4.11 percent the week before. Although points decreased to 0.44 from 0.51 (including the origination fee) for 80 percent LTV loans, the effective rate also increased.
• For 30-year fixed-rate FHA mortgages, rates averaged 4.66 percent, up from 4.40 percent the week before. While points decreased to 0.71 from 0.73 (including the origination fee) for 80 percent LTV loans, the effective rate also increased.
• Rates for 15-year fixed-rate mortgages averaged 4.01 percent, up from 3.76 percent the week before. Points remained unchanged at 0.55 (including the origination fee) for 80 percent LTV loans, so the effective rate also increased.
• For 5/1 adjustable-rate mortgages (ARMs), rates averaged 3.70 percent, up from 3.39 percent the week before. Points remained unchanged at 0.54 (including the origination fee) for 80 percent LTV loans, so the effective rate also increased from last week.