Mortgage Applications Volume Rise For 3rd Week As Rates Fall To 1-Month Low Amid Banking Crisis

The economy has been fairly resilient through the current rate-tightening cycle of the Federal Reserve, although the housing sector hasn’t been among the ones showing strength.

What Happened: A weekly data released early Wednesday confirmed the sector may be turning the corner.

Mortgage application volume rose 3% week-over-week in the week ended March 17, data released by the Mortgage Bankers’ Association showed. This followed a 5% increase in the previous week and a steeper 7.4% climb in the week ended March 3.

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The purchase index rose 2% week-over-week but was 36% lower than a year ago.

The increase in mortgage application volume was attributed to the drop in Treasury yields amid the banking crisis. Mortgage rates fell for a second week, with the 30-gear fixed rate mortgage rate dropping to a one-month low of 6.48%.

Despite the pullback, the spread between the 30-year fixed rate and the 10-year Treasury remained wide at 300 basis points compared to the typical spread of 180 basis points due to increasing mortgage-backed security volatility, said Joel Kan, MBA’s Deputy Chief Economist.

“Both purchase and refinance applications increased for the third week in a row as borrowers took the opportunity to act, even though overall application volume remains at relatively low levels.”

More insight into the housing market could be gleaned when homebuilder KB Home KBH reports Wednesday after the close.

Price Action: In premarket trading, the iShares Mortgage Real Estate Capped ETF REM rose 1.33%, to $21.35, according to Benzinga Pro data.