Purchase loan demand up as rates stay stable

Borrowers rush to beat FHA premium increase

Demand for purchase loans picked up at the end of March to the highest level of the year, while mortgage rates were mostly unchanged this week, according to surveys by the Mortgage Bankers Association and Freddie Mac.

The MBA’s Weekly Mortgage Applications Survey showed demand for purchase loans grew a seasonally adjusted 6.7 percent during the week ending April 1 when compared to the week before.

Looking back a year, purchase loan demand was down 16.8 percent, relatively low by historical standards at levels last seen in 1997, said Michael Fratantoni, MBA’s Vice President of Research and Economics.

Fratantoni said last week’s increase in purchase loan demand was due to a sharp increase in applications in government loans, likely due to a scheduled increase in FHA insurance premiums. Demand for government-backed loans (by the Federal Housing Administration, U.S. Department of Veterans Affairs and U.S. Department of Agriculture) surged a seasonally adjusted 10.3 percent, to the highest level since May 7, 2010.