The numbers: U.S. mortgage applications ticked up, driven by an increase in first-time home-buying activity, despite rates staying over 7%.
The overall market composite index — a measure of mortgage application volume — rose in the last week, according to the Mortgage Bankers Association (MBA) said on Wednesday.
The market index rose 9.7% to 188.2 for the week ending March 1 from a week ago. A year ago, the index stood at 201.5.
Key details: The purchase index — which measures mortgage applications for the purchase of a home — rose 10.6% from a week ago.
Demand for adjustable-rate mortgages also rose 12.5% from a week ago.
Even though rates remain elevated, first-time buyers were active, evidenced by on the 13.5% increase in Federal Housing Administration purchase loans.
The refinance index rose 8.1%.
The average contract rate for the 30-year mortgage for homes sold for $766,550 or less was 7.02% for the week ending March 1. That’s down from 7.04% from the week before.
The rate for jumbo loans, or the 30-year mortgage for homes sold for over $766,550, was 7.21%, up from 7.2% the previous week.
The average rate for a 30-year mortgage backed by the Federal Housing Administration was unchanged at 6.86%.
The 15-year fell to 6.66% from 6.7% from the previous week.
The rate for adjustable-rate mortgages rose to 6.38% from last week’s 6.33%.
The big picture: Mortgage rates are over 7%, but some first-time home buyers aren’t put off, as they attempt to purchase homes ahead of the spring home-buying season.
That’s primarily motivated by the desire to close on a property before competition heats up in the back of the year, when rates are expected to drop.
And with an uptick in for-sale home listings, buyers may feel additional motivation to purchase now, when inventory is easing. New listings rose 13% for the four weeks ending February 25, Redfin said, the biggest increase in nearly three years.
What the MBA said: “Of note, purchase volume – particularly for FHA loans – was up strongly, again showing how sensitive the first-time homebuyer segment is to relatively small changes in the direction of rates,” Mike Fratantoni, senior vice president and chief economist at the Mortgage Bankers Association, said in a statement.
