To paraphrase Dinah Washington, "What a diff’rence a week makes." Mortgage applications increased 10.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 6. This is a marked turnaround from the week ending May 30, when the MBA’s Market Composite Index fell 3.1 percent.
The Market Composite Index rose 10.3 percent on a seasonally adjusted basis and 22 percent on an unadjusted basis from one week earlier. The seasonally adjusted Purchase Index increased nine percent from one week earlier; the unadjusted Purchase Index increased 19 percent over the previous week, but was 13 percent lower than the same week one year ago.
There was also positive activity on the refi side of the business. The Refinance Index increased 11 percent from the previous week, while the refinance share of mortgage activity increased to 54 percent of total applications from 53 percent the previous week.
The MBA noted that the previous week’s data included an adjustment for the Memorial Day holiday.
Across the industry, reaction to the new data brought mixed reactions. Mat Ishbia, president and CEO of Troy, Mich.-based United Shore Financial Services, saw last week’s application activity as a new milestone for his company.
“We had our best week since the last week of May in 2013,” Ishbia said. “It was a substantial week and we’re excited about it.”
Rocke Andrews, broker/owner at Tucson-based Lending Arizona LLC and vice president of NAMB—The Association of Mortgage Professionals, viewed the MBA data as a sign of a new direction.
“This is a response to an increase in consumer confidence and feeling good about the economy, along with a short term dip in interest rates,” said Andrews. “Refis are up as well. The economy is getting better and people are feeling better about their jobs. If interest rates stay stable, we will see a pretty good rebound.”
However, Bill Gassett, real estate agent at Hopkinton, Mass.-based RE/MAX Executive Realty, viewed the data as a delayed reaction to an annual sales trend.
“The spring market started late this year because of the weather,” said Gassett. “What you are seeing at this time of the year are families gearing up for the next school year. We see a lot of movement taking place between now and then.”
Chae Bae, managing member at Denver-based Professional Mortgage Source LLC, agreed with Gassett’s diagnosis. “I’m thinking there will be a purchase business slowdown toward the end of the fall,” Bae said. “Refis may start to pick back up again as rates continue to move down.”
And Dr. Anthony B. Sanders, Distinguished Professor of Finance in the School of Management at George Mason University in Fairfax, Va., was even less optimistic, stating that the data merely reflected a case of déjà vu.
“This was the same blip as last year and look what happened,” said Sanders, adding that it was unlikely to see a purchase volume rally “unless higher paying full-time jobs make a recovery.”