Mortgage demand rises for third week in a row as rates continue to fall

By Aarthi Swaminathan

Mortgage applications rose 3% in the latest week, the Mortgage Bankers Association says

The numbers: Demand for mortgages rose 3% in the latest week as rates fell for the second week in a row. The drop in mortgage rates has opened the gates for a flood of home buyers.

Demand for both purchases and refinancing both rose. That pushed the market composite index -- a measure of mortgage application volume -- up, the Mortgage Bankers Association (MBA) said Wednesday.

The market index rose by 3%, to 221.0, for the week ending March 17 from a week earlier. A year ago, the index stood at 456.2.

Key details: The refinance index rose 4.9%, but was down 68% compared to a year ago.

The purchase index -- which measures mortgage applications for the purchase of a home -- rose by 2.2% from the previous week.

The average contract rate for a 30-year mortgage for homes sold for $726,200 or less was 6.48% for the week ending March 17. That's down from 6.71% the week before, the MBA said.

For homes sold for over $726,200, the average rate for the 30-year was 6.3%, down from 6.39% the previous week.

The 15-year fell to 6.02%, from the previous week's 6.14%.

The rate for adjustable-rate mortgages decreased to 5.58% from the 5.69% the week before.

The big picture: Pent-up demand is boosting the housing market.

Many home buyers have been put off by high housing prices and mortgage rates over the past year. So a dip is prompting a surge in home-buying activity.

And the data is showing signs of a possible recovery: A dip in mortgage rates earlier this year resulted in sales of previously owned homes jumping nearly 15%, according to a separate report from the National Realtors Association on Tuesday.

But how sustained that recovery will be is the question. According to Mortgage News Daily, mortgage rates are trending upward, which could spook buyers.

Market reaction: The yield on the 10-year Treasury note was around 3.6% in early morning trading Wednesday.

-Aarthi Swaminathan

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