There was a significant drop in mortgage applications, especially for refinancing, during the week ended June 13 the Mortgage Bankers Association (MBA) reported today.  Results of MBA's Weekly Mortgage Applications Survey showed a decline in the Market Composite Index, a measure of application volume, of 9.2 percent from the previous week on a seasonally adjusted basis and 10 percent unadjusted.

Refinancing slipped from a 54 percent share of all mortgage applications during the week ended June 6 to a 52 percent share and the Refinancing Index fell 13 percent compared to the earlier week.  The seasonally adjusted Purchase Index decreased 5 percent.  On an unadjusted basis applications for purchase mortgages were down 6 percent week-over-week and were 15 percent lower than during the same week in 2013.

Refinance Index vs 30 Yr Fixed

Purchase Index vs 30 Yr Fixed

"Interest rates increased relative to the previous week, as incoming economic data continues to suggest a pickup in the pace of growth," said Mike Fratantoni, MBA's Chief Economist. "Although the average rate for the week was up only a few basis points, the increase was matched by a large drop in refinance volume, and purchase application volume also declined. Some lenders continue to report that they have pre-approved borrowers who have been unable to find a property given the tight inventory in certain markets."

As Fratantoni pointed out, interest rates moved up slightly on all products with the 15-year fixed-rate mortgage (FRM) making the largest move with an increase of 7 basis point to 3.50 percent.  Points decreased to 0.16 from 0.22 and the effective rate increased. 

The average contract interest rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances ($417,000 or less) increased to 4.36 percent from 4.34 percent, with points increasing to 0.24 from 0.16.  The effective rate increased from the previous week.

Jumbo 30-year FRM (loan balances greater than $417,000) increased to 4.32 percent from 4.27 percent.  Points decreased to 0.09 from 0.12 but the effective rate still increased.

Thirty-year FHA-backed FRM saw am average rate increase of one basis point to 4.07 percent.  Points decreased to -0.39 from -0.03 and the effective rate decreased.

The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) increased to 3.20 percent from 3.18 percent, with points decreasing to 0.27 from 0.35. The effective rate remained unchanged from last week.  ARMs continued to hold an 8 percent share of mortgage applications as they have for nearly all of 2014.

MBA's 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 information on rates assumes a loan with an 80 percent loan to balance ratio.  Points include the origination fee.