Borrowers responded to some of the lowest interest rates in several months by stepping up applications for mortgage financing.  The Mortgage Bankers Association (MBA) said that its Market Composite Index, a measure of mortgage application volume, increased 2.3 percent on a seasonally adjusted during the week ended April 17 when compared to the previous week.  On an unadjusted basis applications were 3 percent higher than during the week ended April 10.

The Refinancing Index rose 1 percent from the previous week but the share of all applications that were for refinancing dropped from 58 percent to 56 percent, the lowest share for that sector since October 2014.  The seasonally adjusted Purchase Index increased 5 percent from the previous week.  The unadjusted Purchase Index was up 6 percent week-over-week and was 16 percent higher than during the same week in 2014.

Refinance Index vs 30 Yr Fixed

Purchase Index vs 30 Yr Fixed

"Purchase applications increased for the fourth time in five weeks as we proceed further into the spring home buying season," said Mike Fratantoni, MBA's Chief Economist.  "Despite mortgage rates below four percent, refinance activity increased less than one percent from the previous week,"

Eleven percent of mortgage applications during the week were for VA mortgages, down from 11.1 percent the previous week and 13.6 percent were for FHA loans, a 10 basis point increase.  The USDA share of applications remained at 0.8 percent.

Interest rates for all fixed rate mortgage products declined during the week as did the effective rates.  The average contract rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances of $417,000 or less declined to its lowest level since January of this year.  The rate was 3.83 percent with 0.32 point compared to 3.87 percent with 0.38 point during the prior week.

The rate for jumbo 30-year FRM (loan balances in excess of $417,000) was 3.83 percent, down one basis point from the previous week.  Points decreased to 0.22 from 0.35 point.

The average contract interest rate for 30-year FRM backed by the FHA decreased to 3.65 percent, its lowest level since May 2013, from 3.67 percent, with points decreasing to 0.12 from 0.23.

Fifteen-year FRM also reached the lowest average level since last January at 3.16 percent with 0.24 point.  The rate a week earlier was 3.16 percent with 0.29 point.

The adjustable-rate mortgage (ARM) share of activity increased to 5.5 percent of total applications from 5.4 percent.  The average contract interest rate for 5/1 ARMs increased to 2.89 percent from 2.82 percent, with points decreasing to 0.29 from 0.40.  The effective rate also increased.

MBA's application data is gathered through its Weekly Mortgage Application Survey which the Association has conducted since 1990.  The survey covers over 75 percent of all U.S. retail residential mortgage applications and respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100; interest rate information assumes a loan with an 80 percent loan to value ratio and points include the origination fee..