Mortgage applications rise slightly as rates move closer to 6%

Mortgage applications increased 0.4% from one week earlier, according to data from the Mortgage Bankers Association (MBA)’s weekly mortgage applications survey for the week ending Feb. 20.

On an unadjusted basis, the index increased 2% compared with the previous week.

The seasonally adjusted purchase index decreased 5% from one week earlier. The unadjusted purchase index decreased 1% compared with the previous week and was 12% higher than the same week one year ago.

“Mortgage rates followed Treasury yields lower last week, with the 30-year fixed rate declining to 6.09% — its lowest level since September 2022. The decrease in rates was enough to drive a 5% increase in conventional refinance applications and a 26% increase in VA refinances,” said Joel Kan, MBA’s vice president and deputy chief economist.

“Purchase applications were down over the week but were 12% higher than a year ago, as the combination of lower rates and improving affordability conditions continue to support stronger demand than last year,” Kan added. “The ARM share stayed above 8%, as ARM rates remained more than 80 basis points below conforming fixed rates. This is giving payment-sensitive borrowers or those seeking larger loans an incentive to choose this product offering.”

The refinance share of mortgage activity increased to 58.6% of total applications, up from 57.4% the previous week. The refinance index, meanwhile, increased 4% from the previous week and was 150% higher than the same week one year ago.

Activity by product varied. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 8.2% of total applications and the U.S. Department of Agriculture (USDA) share of applications also remained unchanged at 0.4%.

The Federal Housing Administration (FHA) share of total applications decreased from 18.4% to 16.1% during the week. And the U.S. Department of Veterans Affairs (VA) share increased from 16.5% to 18.7% during the same period.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased by 8 basis points to 6.09%. Rates for 30-year fixed mortgages with jumbo loan balances moved 1 bps lower to 6.20%.

The average rate for 30-year fixed mortgages backed by the FHA decreased 2 bps to 5.97% and rates for 15-year fixed mortgages decreased by 2 bps to 5.48%. The average contract interest rate for 5/1 ARMs dropped by 6 bps to 5.23%.

Xactus Mortgage Intent Index

Data from Xactus‘s Mortgage Intent Index — which analyzes aggregated, anonymized credit-pull activity across the Xactus Intelligent Verification Platform — saw an 0.57% increase in activity during the week and a 6.6% year-over-year jump.

“With no seasonal adjustments — and with President’s Day historically dampening activity during this week — the continued strength in borrower intent is especially notable. Week-over-week gains despite a holiday reinforce that demand trends remain firm as we move deeper into the early spring buying season,” said Thomas Lloyd, chief strategy officer for Xactus.