The Mortgage Bankers Association (MBA) reported an increase in both refinance and purchase activity in the week ending April 15 with applications up 5.3% overall.
“Purchase application volume jumped last week largely due to another sharp increase in applications for government loans," said Michael Fratantoni, vice president of research and economics at the MBA. "Borrowers were likely motivated to apply for loans before the scheduled increase in FHA insurance premiums. Refinance activity increased somewhat, as rates dropped to their lowest level in a month towards the end of the week.”
The Refinance Index gained 2.7% to ~1976 as the average contract interest rate for 30-year fixed-rate mortgages dropped 15 basis points to 4.83%. As a percent of total application activity, however, refinance share declined to 58.5% from 60.3% and is at its lowest level since early May 2010.
The Purchase jumped 10% to ~211 as Government purchase applications surged 17.6%. In a report from Federal Housing Administration, applications were up nearly 39% in March with purchase applications increasing nearly 48%, while refinancings were up over 29%.
Morgan Stanley analysts also believe that the significant increase in applications was likely a result of borrowers trying to beat the mortgage insurance premium increase that became effective April 18.
"We anticipate this increased pace of applications to continue up to the April 18 deadline, declining thereafter," analysts said.