Mortgage applications have joined mortgage rates on a roller-coaster ride, up one week and down the next.
Applications fell nearly 6% last week, after rising just over 6% the week before, the Mortgage Bankers Association (MBA) said Wednesday.
According to the MBA’s Weekly Mortgage Applications Survey for the week ended May 12, the Market Composite Index, a measure of mortgage loan application volume, decreased 5.7% on a seasonally adjusted basis from a week earlier.
Unadjusted, the Index decreased 6% compared with the previous week.
The Refinance Index shared the up-and-down ride, dropping 8% last week after spiking 10% the week before. The index was 43% lower than the same week last year.
The seasonally adjusted Purchase Index decreased 4.8% last week, after rising 5% a week earlier. Unadjusted, the Purchase Index decreased 5% last week, after rising 5.3% the previous week, and was 26% lower than the same week one year ago.
“Mortgage rates increased last week even as Treasury yields were essentially flat, with the spread between the two rates widening to 310 basis points,” said Joel Kan, MBA’s vice president and deputy chief economist. “Mortgage application activity slowed, as most mortgage rates in the survey increased, with the 30-year fixed rate jumping 9 basis points to its highest level in two months at 6.57%.”
Kan said purchase applications fell to their slowest pace in a month, “as buyers remain wary of this rate volatility, but also as for-sale inventory in many parts of the country remains scarce.”
He added, “Refinance applications accounted for 27% of all applications and dropped almost 8% last week. Most borrowers have lower rates on their mortgages, and those who are in the market are extremely rate sensitive.”
The refinance share of mortgage activity, in fact, slipped to 27.4% of total applications from 28% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.5% of total applications, the MBA said.
The FHA share of total applications slipped to 12% from 12.1% the previous week. The VA share of total applications decreased to 12.2% from 12.9% a week earlier. The USDA share of total applications remained unchanged at 0.4%.
Mortgage Rates
Note: The points listed include the origination fee and are for 80% loan-to-value (LTV) ratio loans.
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 6.57% from 6.48%, with points remaining at 0.61. The effective rate increased from last week.
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $726,200) increased to 6.46% from 6.33%, with points decreasing to 0.38 from 0.51. The effective rate increased from last week.
- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.39% from 6.41%, with points decreasing to 0.97 from 1.01. The effective rate decreased from last week.
- The average contract interest rate for 15-year fixed-rate mortgages increased to 5.96% from 5.91%, with points increasing to 0.68 from 0.58. The effective rate increased from last week.
- The average contract interest rate for 5/1 ARMs increased to 5.71% from 5.35%, with points increasing to 1.1 from 0.79. The effective rate increased from last week.
The MBA’s survey covers over 75% of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, and thrifts. Base period and value for all indexes is March 16, 1990=100.
