U.S. home loan demand rose sharply in the week ended March. 4, as the nation witnesses continued improvement in the labor market.
The total loan applications index, a measure of mortgage loan application volume, increased 15.5 percent on a seasonally-adjusted basis from a week earlier, the Mortgage Bankers Association (MBA) said on Wednesday.
The refinancing loans index rose 17.2 percent from the previous week, reaching the highest level since the week ending January 14, 2011.
Also, the purchasing index was up by 12.5 percent, marking the highest level since the start of the year.
Taking into account typical seasonal patterns, purchase applications rose to their highest level of the year last week. On an unadjusted basis, purchase application activity is the highest since last May, said Michael Fratantoni, MBA's Vice President of Research and Economics.
Besides, the refinance share of mortgage activity increased to 65.5 percent of total applications from 64.9 percent in the previous week.
While the average contract interest rates for 30-year fixed rate mortgage increased to 4.93 percent from 4.84 percent in the previous week, 15-year fixed-rate mortgages remained unchanged at 4.17 percent.
An improving job market is beginning to pave the way for an improving housing market. Additionally, mortgage interest rates remained below 5 percent for a second week, maintaining affordability for buyers and leading to an increase in refinance applications, Fratantoni added.
The unemployment rate in the US fell to 8.9 percent in February from 9 percent in January, according to the Labor Department. February’s decline in unemployment rate was the third consecutive monthly decline.