Applications for U.S. home mortgages increased last week as higher home purchasing activity offset a decrease in refinancing at a time when mortgage rates are rising, an industry group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity increased 2.4 percent to 674.3 in the week ended March 25, partly offsetting the 9.5 percent decline the week before.
The overall increase was fueled by the MBA’s purchase index, a gauge of loan requests for home purchases, which rose 5.5 percent to 470.9, after it lost 3.5 percent the previous week.
The increase was offset by the MBA’s seasonally adjusted index of refinancing applications, which dropped 2.0 percent to 1857.2, after falling 16.5 percent the prior week.
But applications for adjustable-rate mortgages (ARMs) --which have relatively low initial rates that “adjust” in line with market trends after a fixed period -- rose as a percentage of all mortgage applications, climbing to 36.6 percent from 33.5 percent the prior week.
“Rates on 30-year fixed-rate mortgages have increased 34 basis points in the last month. Following this increase in rates, the market attained a record high ARM (adjustable-rate mortgage) share this week, both in terms of number of loans and dollar volumes,” Michael Cevarr, MBA’s director of industry surveys, said in a press release.
Fixed 30-year mortgage rates averaged 6.08 percent last week, excluding fees, up 13 basis points from 5.95 percent the previous week.
One-year ARM rates averaged 4.39 percent last week, excluding fees, up 27 basis points from 4.12 percent one week earlier.
Refinancings also decreased as a percentage of all mortgage applications, falling to 37.8 percent, from 39.5 percent the week before.
The MBA’s purchase index, a gauge of loan requests for home purchases, rose 5.5 percent to 470.9, after it lost 3.5 percent the previous week.
The MBA’s survey covers approximately 50 percent of all U.S. retail residential mortgage originations, and has been conducted weekly since 1990.
Respondents include mortgage bankers, commercial banks and thrifts.
