Higher levels of purchase activity even with rising interest rates drove the increase in mortgage applications compared with one week earlier, according to the Mortgage Bankers Association.

The MBA's Weekly Mortgage Applications Survey for the week ending Feb. 23 found that the refinance index decreased 1% from the previous week. This week's results include an adjustment for the Presidents Day holiday.

The refinance application share decreased to 41.8% from 44.4% the previous week.

The seasonally adjusted purchase index increased 6% from one week earlier. The unadjusted purchase index decreased 1% compared with the previous week and was 3% higher than the same week one year ago.

Mortgage applications rebound

The market composite index, a measure of mortgage loan application volume, increased 2.7% on a seasonally adjusted basis from one week earlier.

Adjustable-rate loan activity increased to 6.7% from 6.4%, while the share of Federal Housing Administration-guaranteed loans increased to 10.3% from 9.9% the week prior.

The share of applications for Veterans Affairs-guaranteed loans increased to 10.7% from 10% and the U.S. Department of Agriculture/Rural Development share remained unchanged at 0.8%.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) remained unchanged from last week at 4.64%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100), the average contract rate decreased 5 basis points to 4.57%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to its highest level since April 2011, 4.68%, from 4.58%. For 15-year fixed-rate mortgages the average rate increased to its highest level since April 2011, 4.07%, from 4.02%. The average contract interest rate for 5/1 ARMs increased to its highest level since February 2011, 3.85%, from 3.72%.

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