Despite interest rates falling to levels last seen almost a year ago, mortgage application volume retreated slightly after three weeks of iimprovement. The Mortgage Bankers Association (MBA) said that its Market Composite Index was down 1.2 percent on a seasonally adjusted basis from the previous week and 2 percent on an unadjusted basis. The Refinance Index, which had also enjoyed a three week rally, dropped 1 percent from the week ended May 16 although refinancing did hold on to a 52 percent share of application volume.
Refinance Index vs 30 Yr Fixed
Applications for home purchases fell for the third straight week. The Purchase Index was down 1 percent on a seasonally adjusted basis from the previous week and was 2 percent lower on an unadjusted basis. The unadjusted Purchase Index was 15 percent below its level during the same week in 2013.
Purchase Index vs 30 Yr Fixed
The average contract interest rate for 30 year fixed rate mortgages (FRM) with conforming balances of $417,000 or less was 4.31 percent, down 2 basis points from the previous week and the lowest level since June 2013. Points decreased to 0.15 from 0.20 and the effective rate was down.
The jumbo 30-year FRM (balances over $417,000), decreased from 4.24 percent to 4.23 percent, also the lowest rate since June 2013. Points jumped to 0.16 from 0.09 and the effective rate increased.
Thirty-year FRM backed by FHA had a contract rate of 4.04 percent, again the lowest rate since last June, with -0.45 point. The previous week the rate was 4.06 percent with -0.39 point. The effective rate was also lower than in the prior period.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.42 percent, the lowest level since October 2013, from 3.43 percent, with points decreasing to 0.06 from 0.15. The effective rate was also down from last week.
Adjustable-rate mortgages (ARM) had an 8 percent share of total applications, unchanged from each of the previous three weeks. The contract interest rate for 5/1 ARMS decreased to 3.13 percent from 3.14 percent and points fell to 0.19 from 0.29. The effective rate decreased.
MBA's weekly Mortgage Application Survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted since 1990 among 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. Points include the origination fee.