Applications for mortgages slowed appreciably during the week ended May 27 and average mortgage rates scattered in all directions.  The Mortgage Bankers Association (MBA) said that its Market Composite Index, a measure of loan application volume, posted a 4.1 percent seasonally adjusted decline, its largest single week change since an identical drop during the week ended April 22. On an unadjusted basis the index was down 5 percent,

The decline was shared almost equally by applications for refinancing and for home purchase.   The Refinancing Index was down 4 percent from the week ended May 20 while the Purchase Index fell 5 percent on a seasonally adjusted basis and 6 percent unadjusted. The unadjusted Purchase Index remained 28 percent higher than the same week one year ago. The Government Purchase Index was down 6 percent from the previous week to its lowest level since last November.

Refi Index vs 30yr Fixed

Purchase Index vs 30yr Fixed

Applications for refinancing made up 54.3 percent of all mortgage applications compared to 53.7 percent the previous week. The FHA share of total applications decreased to 12.5 percent from 12.7 percent a week earlier while the VA share was 12.0 percent, a half point gain. The USDA share of total applications remained unchanged from 0.7 percent the week prior.

Mortgage rate changes, both contract and effective, were, as noted, all over the place.  The average contract rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances of $417,000 or less were unchanged at 3.85 percent, while points ticked down to 0.36 from 0.37, leaving the effective rate unchanged as well.

The rate for jumbo 30-year FRM with balances greater than $417,000 eased back by one basis point to 3.81 percent.  Points increased to 0.35 from 0.27, increasing the average effective rate.

The rate for FHA-backed 30-year FRM dropped from 3.70 percent to 3.65 percent and points for the product declined from 0.27 to 026.  The effective rate decreased.

Fifteen-year FRM had an average rate of 3.12 percent, a 6 basis point increase from a week earlier, while points were unchanged at 0.40.  The effective rate increased. 

Adjustable rate mortgages (ARMs) lost market share, dropping from 5.7 percent to 5.0 percent even though the interest rate for 5/1 ARMs decreased to 3.00 percent from 3.09 percent. Points increased to 0.44 from 031 but the effective rate was down.

MBA's Weekly Mortgage Application 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 data is based on mortgages with an 80 percent loan-to-value ratio and points that include the origination fee.