Mortgage refinance applications reached their highest level in three years as interest rates plunged last week in the aftermath of the Federal Open Market Committee's March meeting.
The Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ending March 29 found overall application volume was up 18.6% and the refinance index increased 39%
Refi activity was at its highest level since January 2016 and its share of total applications increased to 47.4% from 40.4% the previous week.
"There was a tremendous surge in overall applications activity, as
"We had expected factors such as the ongoing strong job market and favorable demographics to help lift purchase activity this year, and the further decline in rates is providing another tailwind. Purchase applications were almost 10% higher than a year ago."
The seasonally adjusted purchase index increased 3% from one week earlier, while the unadjusted purchase index increased 4% compared with the previous week and was 10% higher than the same week one year ago.
"The average loan size for purchase loans declined slightly, as applications for smaller purchase loan sizes exceeded that of higher loan sizes — a positive sign that first-time buyers were increasingly active in the market," Kan said.
Adjustable-rate loan activity increased to 9.5% from 7.8% of total applications, while the share of Federal Housing Administration-insured loans decreased to 8.8% from 9.3% the week prior.
The share of applications for Veterans Affairs-guaranteed loans remained unchanged at 10.4% and the U.S. Department of Agriculture/Rural Development share remained unchanged from 0.6% the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased 9 basis points to 4.36%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350), the average contract rate decreased 14 basis points to 4.21%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased 7 basis points to 4.41%. For 15-year fixed-rate mortgages, the average decreased 9 basis points to 3.78%. The average contract interest rate for 5/1 ARMs remained unchanged at 3.77%.