Stoked by the lowest interest rates in several weeks the volume of applications for mortgages to both purchase and refinance homes increased by the largest percentages during the week ended March 20 than at any time since early January. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of application volume, jumped 9.5 percent on a seasonally adjusted basis from the week ended March 13 and was up 9.0 percent on an unadjusted basis.

Applications for refinancing made up 61 percent of the total, up 2 percentage points from the previous week with much of the activity centered on refinancing; MBA’s Refinance Index rose 12 percent compared to the previous week. The Purchase Index was 5 percent higher than the previous week on both a seasonally adjusted and an unadjusted basis, each reaching its highest level since January.  The unadjusted Purchase Index was 3 percent above its level during the same week in 2014.

FHA loans had a 13.3 percent share of the market, down from 14.3 percent the week before and 10.1 percent of applications were for VA loans compared to 10.3 percent.  Applications for USDA loans decreased from 0.9 percent to 0.8 percent.

Contract interest rates fell across the board during the week and the effective rate retreated for all products but the FHA-backed loan. The average contract rate for the 30-year fixed-rate mortgage (FRM) with conforming balances of $417,000 or declined to the lowest level since February at 3.90 percent with 0.37 point.  The previous week the rate was 3.99 percent with 0.40 point.

The 30-year jumbo FRM with loan balances greater than $417,000 decreased to 3.89 percent, the lowest level since January, from 3.94 percent.  Points decreased to 0.25 from 0.33.

Also reaching the lowest level since January, the rate for FHA-backed 30-year FRM dipped 3 basis points to 3.71 percent.  Points increased to 0.21 from 0.12 and the effective rate was unchanged.

The average contract interest rate for 15-year FRM decreased from 3.28 percent to 3.22 percent, the lowest level since February 2015.  Points decreased to 0.28 from 0.34.

The share of adjustable rate mortgages (ARM) increased to 5.8 percent of applications from 5.5 percent as contract rates on the 5/1 hybrid ARM fell to the lowest level since January.  The average rate was 2.97 percent with 0.38 point compared to 2.99 percent with 0.43 point the previous week.

MBA’s Weekly Mortgage Applications Survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100 and rate information is based on loans with an 80 percent loan-to-value ratio and points include the origination fee.