Application activity increased 3.3% from one week earlier, even though mortgage interest rates rose on speculation the Federal Open Market Committee could act in March.

The Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ending March 3 found that the refinance index increased 5% from the previous week. The prior week's results included an adjustment for the Presidents' Day holiday.

The refinance share of mortgage activity increased to 45.4% of total applications from 45.1% the previous week.

The seasonally adjusted purchase index increased 2% from one week earlier, while the unadjusted purchase index increased 15% compared with the previous week and was 4% higher than the same week one year ago.

The adjustable-rate mortgage share of activity increased to 7.7% from 7.3%, while the Federal Housing Administration share decreased to 11.8% from 12.3% the week prior.

The VA share of total applications decreased 1 basis point to 11.6% and the USDA share remained unchanged at 0.9%.

The rate increases are due to "a series of speeches by Federal Reserve officials suggesting that a rate hike is likely in mid-March," said Erin Lantz, vice president of mortgages at Zillow in a separate press release.

"Friday's jobs report is the headline event this week: a strong report would likely lock-in a March Fed hike and hold mortgage rates steady, while an exceptionally weak jobs report could push rates lower," she continued.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased 6 basis points to 4.36%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100), the average contract rate increased 4 basis points to 4.27%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.18% from 4.07%, while for 15-year fixed-rate mortgages backed by the FHA, the average increased to 3.57% from 3.51%.

The average contract interest rate for 5/1 ARMs increased to 3.48% from 3.35%.

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