A healthy increase in purchase mortgage applications last week was met with shrinking refinance activity leaving the Mortgage Bankers Association's Market Composite Index for the week ended April 3 essentially unchanged. The Composite, a measure of application volume, increased 0.4 percent on a seasonally adjusted basis from the previous week and was 1.0 percent higher on an unadjusted basis than the Composite for the week ended March 27.

The seasonally adjusted Purchase Index and its unadjusted counterpart both increased by 7 percent compared to the previous week and the unadjusted index was 12 percent higher than during the same week in 2014.  According to Michael Fratantoni, MBA's Chief Economist, it was the highest level of activity for the seasonally adjusted Purchase Index since July 2013 and the third straight week that purchase volume had increased.  

At the same time the Refinance Index decreased 3 percent and the share of applications that were for refinancing dropped from 60 percent to 57 percent.  It was the lowest market share for refinancing since early October.

Refinance Index vs 30 Yr Fixed

Purchase Index vs 30 Yr Fixed

The FHA share of total applications increased to 13.2 percent from 12.8 percent the previous week and the VA share rose to 10.7 percent from 10.5 percent. The USDA portion of the application volume remained unchanged at 0.8 percent.

Both contract and effective mortgage interest rates were lower during the week ended April 3 than the previous week.  The average contract interest rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances ($417,000 or less) decreased 3 basis points to 3.86 percent.  Points decreased to 0.27 from 0.36.

Jumbo 30-year FRM (mortgage balances greater than $417,000) had an average contract rate of 3.81 percent, the lowest level since May 2013, with 0.26 point.  The previous week the rate was 3.90 percent with 0.34 point.

Thirty-year FRM with FHA guarantees had an average contract rate of 3.69 percent with 0.18 point.  The prior week the average rate was 3.73 percent with 0.13 point.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.15 percent from 3.21 percent.  Points were unchanged at 0.29.  

The average contract interest rate for 5/1 adjustable rate mortgages declined by 17 basis points resulting in the lowest level for these loans since May 2013.  Points increased from 0.41 to 0.45.  The ARM share of applications during the week decreased from 5.6 to 5.5 percent. 

MBA's data is gathered through its Weekly Mortgage Application Survey.  The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted since 1990. Respondents include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100 and rate information.is based on loans with 80 percent loan to value ratios.  Points include the origination fee.