This year's spring home-buying season is starting earlier than usual and mortgage applications saw a lift with an increase in purchase applications.
The data, which is based on Mortgage Bankers Association's Weekly Mortgage Applications Survey, showed a 0.2 percent increase in mortgage applications from last week's figures. As reported by HousingWire, the rise is largely attributed to the 4 percent increase in seasonally adjusted purchase index, the highest level since the beginning of this year.
Total applications from the Federal Housing Administration remained at 12 percent. Applications from the Veteran Affair's climbed to 12.6 percent from the previous week's 12.1 percent. Meanwhile, United States Department of Agriculture's applications rose from 0.7 percent a week earlier to 0.8 percent.
While mortgage rates experienced an increase last week across all categories as observed by the MBA, a recent Bloomberg report says there are signs pointing to further falls. This is in line with the bond markets rally where U.S. Treasury prices jumped on Tuesday.
Mortgage refinancing activity is also expected to pick up despite the rate increases by the Federal Reserve. Longer-term yields in the bond market have been plummeting this year so contrary to what many expected, the refinancing boom can be expected to happen. The MBA even upped its forecast of mortgage refinancing this year to $520 billion from last December's $415 billion.
Private lenders also share the same projections. Sean Grzebin, head of retail mortgage banking for JPMorgan Chase & Co, said per Bloomberg, "It's clear, we're seeing a high level of refinancings beyond what initial projections were."
If mortgage rates continue to fall, around 8.8 million loans will be eligible for refinancing according to data company Black Knight. That is about 20 percent of the total loans.
"This could be a near-term boon," said Chris Abate, a chief financial offer of mortgage company Redwood Trust. "We'll have to see how it impacts our volumes but it's a good sign."
