Mortgage applications increased 2.6% the week ending May 3, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey.
The Market Composite Index, a measure of mortgage application volume, increased 2.6% from the week prior on a seasonally-adjusted basis and 3% on an unadjusted basis.
The Refinance Index rose by 5% in the same time frame and was 6% lower than the same week last year.
The seasonally adjusted and unadjusted Purchase Indices both increased 2% from one week earlier, but were 17% lower year-over-year.
MBA’s Senior Vice President and Chief Economist Mike Fratantoni noted in his analysis that treasury rates and mortgage rates fell last week upon the news of a slowing job market, with wage growth at its slowest pace since 2021. Meanwhile, the Federal Reserve announced it plans to ease quantitative tightening in June, with another rate hike unlikely.
“The conventional 30-year rate dropped 11 basis points, and the FHA rate fell 17 basis points to 6.92%, back below 7% for the first time in three weeks,” Fratantoni said. “Mortgage applications increased for the first time in three weeks, with refinances up 5%. Even with the increase, which included a 29% jump in VA refinances, refinance volume remains about 6% below last year’s already low levels.”
The 2% increase in purchase applications was driven by a 5% gain in FHA applications.
“First-time homebuyers account for roughly half of purchase loans, and the government lending programs are an important source of financing for these homebuyers,” Fratantoni pointed out. “The gain in FHA activity is a sign that this segment of the market is active.”
Among total mortgage applications filed the week ending May 3, the refinance share increased to 30.6% from 30.2%; the adjustable-rate mortgage (ARM) share of activity decreased to 7.7%; the FHA share rose to 12.9% from 127%; the VA share - to 11.7% from 11.3%, and the USDA share remained unchanged at 0.4%.
For the same week, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 7.18% from 7.29% with points unchanged at 0.65 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $766,550) decreased to 7.31% from 7.39%, with points unchanged at 0.46 (including the origination fee) for 80% LTV loans.
