Mortgage applications rose last week as mortgage rates fell, the Mortgage Bankers Association (MBA) said Wednesday, a positive turn after applications fell a week earlier.
According to the MBA’s Weekly Mortgage Applications Survey for the week ended May 5, the Market Composite Index — a measure of mortgage loan application volume — increased 6.3% on a seasonally adjusted basis from a week earlier. Unadjusted, the index increased 7% compared with the previous week.
The Refinance Index increased 10% from the previous week and was 44% lower than the same week one year ago.
The seasonally adjusted Purchase Index also increased, rising 5% from a week earlier. Unadjusted, the index increased 5.3% compared with the previous week, but was 32% lower than the same week one year ago.
Rates Fell
“Mortgage applications responded positively to a drop in rates last week, as the Fed signaled a potential pause at the current level for the federal funds rate in anticipation of inflation slowing and tightening financial conditions that will slow economic and job growth,” said Joel Kan, MBA’s vice president and deputy chief economist. “Mortgage rates for all surveyed loan types decreased over the week with the 30-year fixed rate at 6.48%.”
Kan noted that while they were still well below the level seen in the same week last year, purchase applications increased 5% last week.
“Lower rates from week to week have helped buyers in the market, but limited for-sale inventory remains a challenge for many homebuyers,” he said. “Refinance activity jumped 10% to its highest levels since September 2022, although there is only a small pool of borrowers who can benefit from refinancing with rates at these levels.”
The refinance share of mortgage activity increased to 28% of total applications from 27.2% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.8% of total applications.
The FHA share of total applications decreased to 12.1% from 12.5% the previous week. The VA share of total applications jumped 106 basis points, to 12.9% from 11.3% the previous week. The USDA share of total applications dipped to 0.4% from 0.5% the previous week.
Mortgage Rates
Note: The points listed include the origination fee and are for 80% loan-to-value (LTV) ratio loans. The effective rate for each rate below decreased from the previous week.
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 6.48% from 6.5%, with points decreasing to 0.61 from 0.63.
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $726,200) decreased to 6.33% from 6.37%, with points decreasing to 0.51 from 0.54.
- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.41% from 6.43%, with points decreasing to 1.01 from 1.02
- The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.91% from 6.01%, with points increasing to 0.58 from 0.55.
- The average contract interest rate for 5/1 ARMs decreased to 5.35% from 5.48%, with points decreasing to 0.79 from 1.14.
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.
