Despite mortgage rates that continue to hover near 2016 lows, mortgage application activity was essentially flat during the week ended May 6.  Refinancing applications lost market share for the third consecutive week.

The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of loan application volume, rose 0.4 percent on a seasonally adjusted basis compared to the week ended April 29.  It was up 1.0 percent on an unadjusted basis.

Applications for refinancing gained 0.5 percent over the previous week's volume but the market share slipped from 52.9 percent to 52.8 percent.  The seasonally adjusted Purchase Index was 0.4 percent higher than a week earlier and on an unadjusted basis it grew 1.0 percent.  The unadjusted Purchase Index was 14 percent higher than during the same week in 2015.

Refi Index vs 30yr Fixed

Purchase Index vs 30yr Fixed

FHA loans had a 13.0 percent share of applications, down from 13.5 percent a week earlier and VA applications inched up from a 11.5 percent share to 11.7 percent.  The USDA share was unchanged at 0.7 percent.

Interest rates dropped for all fixed-rate mortgage products and effective rates were down across the board. The average contract rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances ($417,000 or less) decreased to 3.82 percent, from 3.87 percent, with points decreasing to 0.34 from 0.36.  It was the lowest level for this loan type since April.

The average contract interest rate for 30-year FRM with jumbo loan balances larger than $417,000 eased by 5 basis point to 3.74 percent.  Points were unchanged at 0.31.

The average contract interest rate for FHA-backed 30-year fixed-rate mortgages also decreased by 5 basis points to 3.64 percent.  Points decreased to 0.25 from 0.33.

A third 5 basis point drop was in the contract rate for 15-year FRM which finished the week with an average interest rate of 3.06 percent. Points decreased to 0.33 from 0.36.

The sole increase in contract rates was an average 2 basis point upward bump for 5/1 adjustable rate mortgages (ARMs) to 2.93 percent.  A decline in points, from 0.30 to 0.22, nonetheless resulted in a lower effective rate. The adjustable-rate mortgage (ARM) share of activity increased to 5.7 percent of total applications.

MBA's Weekly Mortgage Application Survey, which has been conducted since 1990, covers over 75 percent of all U.S. retail residential mortgage applications. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100 and interest rate information is based on loans with an 80 percent loan to value ratio and points that include the origination fee.