The latest data from the Mortgage Bankers Association's Weekly Mortgage Applications Survey showed a 2.6% decline in mortgage applications for the week ending on May 15, 2020, compared to the previous week
. On an unadjusted basis, the market composite index showed a 2% drop from one week earlier. The refinance index fell 6%, but was still 160% higher than the same week one year ago. The seasonally adjusted and unadjusted purchase index rose 6%.
"Applications for home purchases continue to recover from April's sizeable drop and have now increased for five consecutive weeks. Purchase activity—which was 35% below year-ago levels six weeks ago—increased across all loan types and was only 1.5% lower than last year," said Joel Kan, MBA's associate vice president of economic and industry forecasting. "Government purchase applications, which include FHA, VA, and USDA loans, are now 5% higher than a year ago, which is an encouraging turnaround after the weakness seen over the past two months. As states gradually reopen and both homebuyer and seller activity increases, we will be closely watching to see if these positive trends continue, or if they reflect shorter-term, pent-up demand."
The report revealed that refinance activity decreased to 64.3% of total applications, down from 67% last week
, while the adjustable-rate mortgage share of activity rose 3.2% compared to last week. The FHA share remained stagnant and the VA share of total applications decreased to 13.4%, down 0.3% from the previous week.
"Despite mortgage rates remaining close to record-lows, refinance activity slid to its lowest level in over a month," said Kan. "The average loan amount for refinances fell to its lowest level since January—potentially a sign that part of the drop was attributable to a retreat in cash-out refinance lending as credit conditions tighten. We still expect a strong pace of refinancing for the remainder of the year because of low mortgage rates. With many homeowners still facing economic and employment uncertainty, these refinance opportunities will allow them to save money on their monthly payments, which can then be used to help other areas of their budgets."