Although interest rates extended their decline for the second week, the level of mortgage activity failed to respond.  The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage application volume, fell during the week ended May 25 for the sixth consecutive time.  Applications for both refinance and purchase mortgages were down.

MBA's Market Composite Index lost 2.9 percent on a seasonally adjusted basis from the week ended March 18.   On an unadjusted basis, the Index fell by 4.0 percent.


Refi Index vs 30yr Fixed

Purchase Index vs 30yr Fixed

The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 2 percent higher than the same week one year ago.

The Refinance Index fell again, retreated another 5 percent week-over-week, reaching is lowest level since December 2000.  The share of applications that were for refinancing was also at pre-recession lows, reaching 35.3 percent of the total, the smallest since August 2008.  The share the prior week was 35.7 percent.

Applications for FHA-backed mortgages accounted for a 9.9 percent share of the total, down from 10.3 percent the previous week. The VA share ticked up 0.1 point to 9.9 percent while the USDA share was unchanged at 0.8 percent

The contract and effective interest rates for fixed rate mortgages (FRM) were down across the board.  The average contract interest rate for 30-year FRM with conforming loan balances of $453,100 or less decreased to 4.84 percent from 4.86 percent, with points decreasing to 0.47 from  0.52 

The average contract interest rate for jumbo 30-year FRM, those loans with balances exceeding the conforming limit, decreased to 4.73 percent from 4.81 percent.  Points decreased to 0.36 from 0.42.

Thirty-year FRM backed by the FHA had a contract rate of 4.85 percent compared to 4.90 percent the prior week.  Points were up from 0.85 to 0.88.

The rate for 15-year FRM was 4.24 percent with 0.51 point.  The previous week the rate was 4.31 percent with 0.56 point.

Although the contract rate for adjustable rate mortgages (ARMs), declined by a single basis point, points jumped from 0.46 to 0.62, pulling the effective rate higher.  The ARM share of activity decreased to 6.7 percent of total applications from 6.8 percent.

MBA's Weekly Mortgage Applications Survey has been conducted since 1990 and covers over 75 percent of all U.S. retail residential mortgage 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.