Refinancing Spurs Mortgage Application Uptick

Mortgage applications seesawed up on a refinance-fueled ascension as interest rates fell to their lowest rates since January 2018, according to data from the Mortgage Bankers Association (MBA) for the week ending May 31.

 

The Market Composite Index increased by 1.5 percent on a seasonally adjusted basis from one week earlier, but the unadjusted index dropped by 10 percent. The seasonally adjusted Purchase Index was down by two percent from one week earlier and the unadjusted index took a 14 percent tumble, although it was also 0.5 percent higher than the same week one year ago. The unadjusted Refinance Index increased by six percent from the previous week as the refinance share of mortgage activity increased to 42.2 percent of total applications from 39.7 percent the previous week.

 

Among the federal programs, the FHA share of total applications decreased to 9.5 percent from 9.6 percent the week prior while the VA share of total applications increased to 11.3 percent from 11.2 percent and the USDA share of total applications dipped to 0.6 percent from 0.7 percent.

 

"Mortgage rates dropped to their lowest level since the first week of 2018, driven by increasing concerns regarding the ongoing trade tensions with China and Mexico," said Mike Fratantoni, MBA senior vice president and chief economist. "Some borrowers, particularly those with larger loans, jumped on the opportunity to refinance, bringing the index and average refinance loan size to their highest levels since early April. Additionally, refinances for FHA and VA loans jumped by 11 percent. Potential homebuyers may be more cautious given the heightened economic uncertainty."

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