Mortgage applications rise on increase in refinancing

The refinance share of mortgage activity increased to 75.2 percent of total applications from 70.5 the previous week. 

“Renewed concerns about sovereign debt in Europe led to a drop in rates last week, with the 30-year rate tying our survey low, reached in early February,” said Jay Brinkmann, MBA’s chief economist.  

Survey participants said about 32 percent of this refinance volume was for Home Affordable Refinance Program (HARP) loans. 

Purchase activity declined sharply, due mostly to a 23 percent drop in applications for Federal Housing Administration (FHA) purchase loans, the largest weekly drop in the government purchase index since the expiration of the first-time homebuyer tax credit in May 2010. The demand for conventional purchase loans was down slightly, according to MBA. 

“This drop follows big increases in the demand for FHA loans over several weeks in anticipation of the FHA mortgage insurance premium increases that went into effect last week,” Brinkmann said. 

The average loan size for purchases is increasing and was $233,381 last month, up from $225,463 in February with the largest loans in the Pacific region at $337,227. 

For refinancing, the average amount was $214,593, down from $222,048 in February. The largest refinance loans also were in the Pacific at $290,711. 

The average rate on 30-year fixed mortgages with conforming loan balances ($417,500 or less) dropped to 4.05 percent from 4.10 percent, while the rate for loans greater than $417,500 were down to 4.36 percent from 4.43.

The average contract rate for 30-year fixed loans backed by the FHA decreased to 3.83 percent from 3.87, while 15-year fixed mortgages fell to 3.33 percent from 3.37 percent.