Despite appearances, the low-rate spurred rally in mortgage applications reported last week didn't really go "poof" this week. Activity was still strong even as the Mortgage Bankers Association's (MBA's) Market Composite Index gave back some of its previous outsized gains.
The Index, a measure of mortgage loan application volume, decreased 3.4 percent on a seasonally adjusted basis during the week ended June 14 after gaining nearly 27 percent the prior week. On an unadjusted basis, the Index lost 4 percent.
The Refinance Index decreased 3.5 percent, only a fraction of its previous 47 percent surge. The share of applications that were for refinancing continued to gain ground, rising from 49.8 percent to 50.2 percent.
While it didn't match the refi enthusiasm last week the seasonally adjusted Purchase Index did gain 10 points, breaking a four-week downturn. It declined 3.5 percent this week and the unadjusted index was down 5.0 percent. The unadjusted version remained 4.0 percent higher than the same week one year ago.
Refi Index vs 30yr Fixed
Purchase Index vs 30yr Fixed
"After seeing a six-week streak, mortgage rates for 30-year loans increased slightly, which led to a pullback in overall refinance activity," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Borrowers were sensitive to rising rates, but the refinance share of applications was still at its highest level since January 2018, and refinance activity was at its second highest level this year. Government refinances actually increased last week, led by a 17 percent [increase] in VA refinance applications, while conventional refinance applications decreased 7 percent."
Added Kan, "Purchase applications decreased more than 3 percent last week, but were still up almost 4 percent from last year. Strong demand from first-time buyers and low unemployment continue to push this year's purchase activity above a year ago."
The FHA share of total applications increased to 9.4 percent from 8.9 percent and the VA share to 11.9 percent from 11.0 percent. USDA applications ticked down from a 0.6 percent share to 0.5 percent.
The average contract interest rate for 30-year fixed-rate mortgages (FRM) with balances at or below the conforming limit of $484,350 increased to 4.14 percent from 4.12 percent. Points increased to 0.38 from 0.33 and the effective rate was up.
The rate for jumbo 30-year FRM, loans with balances above the conforming limit, was unchanged at 4.04 percent but points increased to 0.24 from 0.17. The effective rate moved higher.
Thirty-year FRM backed by the FHA had a rate of 4.12 with 0.44 point. The previous week the rate was 4.09 percent with 0.26 point. The effective rate also rose.
The average rate for 15-year fixed-rate mortgages dipped to 3.50 percent from 3.53 percent. Points increased to 0.33 from 0.32 and the effective rate declined.
The average contract interest rate for 5/1 adjustable rate mortgages (ARMS) rose 2 basis points to 3.45 percent but points dropped to 0.23 from 0.32 and the effective rate declined. The ARM share of activity decreased from 7.9 percent the previous week to 6.1 percent.
MBA's Weekly Mortgage Applications Survey been conducted since 1990 and covers over 75 percent of all U.S. retail residential 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.
