Mortgage applications fell 5.2% in the final week of May, as mortgage rates reached their highest level since early May, the Mortgage Bankers Association (MBA) reported Wednesday.
The MBA’s Weekly Applications Survey for the week ending May 31, 2024 indicated mortgage loan application volume decreased 5.2% on a seasonally adjusted basis from one week prior, including an adjustment for the Memorial Day holiday.
On an unadjusted basis, the MBA’s Market Composite Index decreased 16% compared with the previous week. The Refinance Index fell 7% from the previous week, but was 5% higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 4% from one week earlier. The unadjusted Purchase Index decreased 16% compared with the previous week and was 13% lower than the same week one year ago.
“Mortgage rates moved slightly higher last week, with the 30-year conforming rate reaching 7.07 percent – its highest level since early May – despite incoming data indicating somewhat slower economic growth,” MBA’s SVP and Chief Economist Mike Fratantoni. “After adjusting for the Memorial Day holiday, both purchase and refinance application volumes were down, with purchase activity specifically 13 percent below last year’s level.”
Added Fratantoni, “Government purchase volume was down less, helped by growth in VA applications. The market is relying on first-time homebuyer demand, and many first-time buyers do use government lending programs.”
The refinance share of mortgage activity decreased to 31.1% of total applications from 31.3% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.7% of total applications.
The FHA share of total applications increased to 13.2% from 12.7% the week prior. The VA share of total applications increased to 12.1% from 12% the week prior. The USDA share of total applications decreased to 0.3% from 0.4% the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 7.07% from 7.05%, with points increasing to 0.65 from 0.63 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.
