Following a three-week period when lending volumes largely moved sideways, the MBA's Market Composite Index jumped a seasonally adjusted 3.3% from seven days earlier. In the previous week, applications managed to nudge up by 0.1%. But on a year-over-year basis, it came in 3.4% lower. The index measures application activity based on surveys of the trade group's members

Volume picked up despite the latest rise in interest rates, with economic data pointing to persistent inflation and a robust economy. The 30-year average for loans with conforming balances making them eligible for sale to the government-sponsored enterprises accelerated to 7.13% from 7.01% one week prior. The average among MBA lenders ended at its highest point since December, said Joel Kan, MBA vice president and deputy chief economist.

Points to help bring down the rate, meanwhile, increased to 0.65 from 0.59 on 80% loan-to-value ratio applications. 

"Despite these higher rates, application activity picked up, possibly as some borrowers decided to act in case rates continue to rise," Kan said in a press release.

Purchase applications drove most of the uptick in a housing market that has data pointing in sometimes contradictory directions. The MBA's Purchase Index climbed up by a seasonally adjusted 5% after four weeks of declines. But applications were still 9.9% lower from the same survey period a year ago. 

While homes are selling quicker compared to last year in much of the country, fewer sellers expect bidding wars, and price cuts are also becoming more common, according to reports from Realtor.com and Zillow this week.  

And although housing inventory has also shown signs of picking up to start 2024, a greater number of homes on the market is also not resulting in increased affordability. The average purchase-loan size stop increasing last week, though, after reaching an almost two-year high in late March. The mean amount settled at a still-elevated $447,900, down a fraction from $449,400 a week earlier.

Purchases increased at a greater pace than the MBA's Refinance Index, which squeezed out an 0.5% weekly gain. But on a year-over-year basis, refinance volumes shot up 11.3%. The share of refinances relative to total volume came out to 32.1%, falling from 33.3% seven days prior.

Higher fixed rates typically lead to heightened interest in adjustable mortgages, and last week was no exception with the ARM Index rising 8.7%. Adjustable-rate mortgages also garnered 7.3% of all applications compared to 6.9% in the previous survey period. 

The conventional lending market provided most of the momentum for lenders last week, as the Government Index slowed a seasonally adjusted 2.2%. 

The share of federally backed activity also contracted, primarily due to reduced volumes coming through the Department of Veterans Affairs. VA-sponsored applications made up 12.4% of total volume, dropping from 14% in the prior survey. But Federal Housing Administration-guaranteed loans took a 12.3% share, inching up from 12.1%. The segment of mortgage applications sponsored by the U.S. Department of Agriculture was 0.4% week over week.