Mortgage application volume increased 3.6 percent last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
Applications to purchase a home increased 2 percent for the week — the first uptick in a month — a sign of optimism in the housing market.
“After four consecutive declines, purchase applications increased almost 2 percent over the week and 2.5 percent compared to a year ago — showing some promise as we edge closer to the spring homebuying season,” said Joel Kan, MBA associate vice president.
Some real estate agents have reported surprise at better-than-expected traffic at open houses this month, and the new numbers seem to confirm those perceptions.
Still, overall volume was 2.3 percent lower than a year ago.
The biggest boost came from applications to refinance a home loan, which are far more sensitive to weekly interest rate moves. The 30-year fixed rate was essentially unchanged at 4.66 percent. Homeowners clearly saw an opportunity, as refinance applications increased 6 percent from the previous week. They were 8 percent lower than a year ago.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) increased to 4.56 percent from 4.48 percent, with points decreasing to 0.23 from 0.27 (including the origination fee) for 80 percent loans. The effective rate increased from last week.
The positive numbers in mortgage application volume are in line with this month’s homebuilder sentiment, which rose 4 points, according to a monthly survey from the National Association of Home Builders/Wells Fargo Housing Market Index. That index showed an increase in buyer traffic, sales expectations and current sales conditions in February.
Builders still point to a concern in affordability, however, which is at a 10-year low, according to the index’s data. There continues to be a critical shortage of affordable single-family homes for sale.
“Ongoing job creation and solid household formations will keep demand firm, but builders will continue to grapple with supply-side headwinds that will dampen more vigorous growth in the single-family sector,” said NAHB chief economist Robert Dietz.