Mortgage Apps: Signs of Life

Bottom Line:  The primary mortgage market continued to show signs of life last week, benefiting from a modest decline in mortgage rates this year. Purchase applications rose to their highest level since October and, while still historically low, continued to show an impulse to move higher on lower rates. Refi applications, which started the year at record lows, jumped to their higher levels since September. With lower volatility and a modest spread tightening in the secondary market, primary market rates are settling in just below 6.5% on the average 30-year fixed rate. Housing demand remains robust, so any help on affordability from even slightly lower mortgage rates should help activity find its footing in the first half of the year.The MBA Mortgage Application Index ROSE 7.0% to 255.0, ABOVE the 13-week average of 209.0 but -53.7% BELOW the year-ago level. Non-seasonally adjusted the index was nearly unchanged, UP 0.6%.The Purchase Index ROSE 3.4% to 205.0, ABOVE the 13-week average of 177.0 but -31.6% BELOW the year-ago level.
 
The Refinancing Index ROSE sharply, UP 14.6% to 502.0, ABOVE the 13-week average of 369.0 but -74.8% BELOW the year-ago level. The effective (adjusted for points paid) 30-year mortgage rate FELL slightly, DOWN -3bps to 6.4%, BELOW the 13-week average of 6.75% but 66bps ABOVE the year-ago level. Current coupon yields in the secondary market were up 3.0 bps last week , closing at 4.88%, and were little changed this week through Tuesday.