Refinancing rose to the surface yet again, driving the gain in mortgage applications during the week ended May 17. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of application volume, increased 2.4 percent on a seasonally adjusted basis from one week earlier and was 2.0 percent higher before seasonal adjustment. The increase was solely due to an 8.0 percent surge in the Refinance Index. The share of applications that were for refinancing also increased, jumping from 37.9 percent during the week ended May 10 to 40.5 percent.
The volume of purchase mortgages declined for the second straight week. The seasonally adjusted Purchase Index decreased 2 percent from the previous week while the unadjusted version lost 3.0 percent. The latter was still 7.0 percent higher than during the same week in 2018.
Refi Index vs 30yr Fixed
Purchase Index vs 30yr Fixed
Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting said of the week's activity, "Mortgage rates fell for the fourth straight week, with the 30-year fixed rate mortgage hitting its lowest level since January 2018, leading to a rebound in refinances. The refinance index increased 8 percent to its highest level in over a month, and once again there was an increase in average refinance loan sizes, [to $343,900] as borrowers with larger balances responded accordingly to lower rates.
Kan continued, "Purchase activity declined again, but remained around 7 percent higher than a year ago. We're keeping a close eye on whether there may be some adverse effects of the ongoing global trade disputes on overall demand. Some potential homebuyers may be delaying their home search until there's more certainty."
The average loan size requested across all applications during the week increased from $317,500 to $337,100 while the size of purchase mortgages declined from $333,700 to $332,500.
The FHA share of total applications dropped from 10.1 percent the previous week to 9.4 percent and the VA share rose to 11.0 percent from 10.6 percent. The USDA share remained at 0.6 percent.
The average contract interest rate for 30-year fixed-rate mortgages (FRM) with origination balances at or below the conforming loan limit of $484,350 decreased to 4.33 percent from 4.40 percent. Points increased to 0.43 from 0.40 and the effective rate declined from the prior week.
The rate for jumbo 30-year FRM, loans with balances exceeding the conforming limit, was unchanged at 4.24 percent. Points grew to 0.35 from 0.27 and the effective rate moved higher.
Thirty-year FRM backed by the FHA had an average rate of 4.34 percent with 0.47 point. The previous week the rate was 4.32 percent with 0.49 point. The effective rate increased from the previous week.
The rate for 15-year FRM was unchanged during the week at 3.78 percent. Points dipped to 0.40 from 0.43 and the effective rate decreased.
The rate for 5/1 adjustable rate mortgages (ARMs) averaged 3.57 percent with 0.37 point during the week compared to 3.82 percent with 0.44 point a week earlier, and the effective rate moved lower. Applications for ARMs increased from a 6.3 percent share of the week's applications to 6.8 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.