It officially became a buyers' market in mortgage applications during the week ended May 2.  The Mortgage Bankers Association said that applications for home purchase mortgages dominated the market by a whisker as applications for refinancing made up less than half of all applications for the first time since 2009.

Mortgage activity increased from the previous week, moving higher for the first time since early April.  The Market Composite Index, a measure of application volume, increased 5.3 percent on a seasonally adjusted basis from the week ended April 25 and was up 6 percent on an unadjusted basis.  Even as the market share for refinancing decreased from 50 percent to 49 percent the absolute number of applications increased, driving the Refinancing Index up by 2 percent compared to the previous week.  The Purchase Index also rose, up 9 percent on a seasonally adjusted basis from a week earlier and 10 percent on an unadjusted basis.  The unadjusted index was down 16 percent from the same week in 2013.

Refinance Index vs 30 Yr Fixed

Purchase Index vs 30 Yr Fixed

"It is official: we are in a majority purchase market for the first time since 2009," said Mike Fratantoni, MBA's Chief Economist. "A sizeable increase in purchase applications last week likely reflected the impact of somewhat lower mortgage rates as well as continued growth in the job market, as confirmed by Friday's employment report from the BLS. Despite the strong increase in the purchase market last week, volume continues to run 16 percent behind last year's pace."

Contract interest rates dropped during the week, some to the lowest levels in many months, and all effective rates decreased from the previous week.  The average rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances of $417,000 or less decreased to 4.43 percent, the lowest rates since November 2013, from 4.49 percent.  Points decreased to 0.21 from 0.38.

The average rate for jumbo 30-year FRM (balances over $417,000) dropped to 4.29 percent, the lowest rate since June 2013, from 4.37 percent.  Points were unchanged at 0.14.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.13 percent from 4.17 percent. Points decreased to -0.03 from 0.10.

The average contract interest rate for 15-year fixed-rate mortgages decreased 1 basis point to 3.52 percent and points were down to 0.22 from 0.31.

The average contract interest rate for 5/1 ARMs decreased to 3.21 percent from 3.26 percent, with points decreasing to 0.29 from 0.35. The adjustable-rate mortgage (ARM) share of activity increased from 8 to 9 percent of total applications.

MBA's data is derived from its Weekly Mortgage Applications Survey which it 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 and interest rates are quoted for loans with an 80 percent loan-to-value ratio.  Points include the origination fee.