Americans got back to work during the week ended June 5 and mortgage applications rebounded significantly.  Volume made up the ground lost during the previous holiday shortened week but only recovered a small part of the declines suffered in the five weeks that preceded it.

The Mortgage Bankers Association said its Market Composite Index, a measure of application volume rose 8.4 percent on a seasonally adjusted basis from the week ended May 29 and was up 19 percent unadjusted.  The previous week's data contained an adjustment for the Memorial Day holiday.

The Refinance Index increased 7 percent from the earlier week but the refinancing share of all applications remained at 49 percent. The seasonally adjusted Purchase Index rose 10 percent and the unadjusted Purchase Index was up 20 percent compared to the previous week.  Volume was 15 percent higher than the same week one year ago.

Refinance Index vs 30 Yr Fixed

Purchase Index vs 30 Yr Fixed

Mike Fratantoni, MBA's Chief Economist acknowledged the effect holidays are having on MBA's data.  "Mortgage application volume rebounded strongly in the week following the Memorial Day holiday, indicating that the holiday had a larger impact on business activity than originally assumed," he said. "Comparing volume over the past two weeks, purchase activity is up over 6 percent, while refinance activity is down 5 percent. Strong job gains in May and initial signs of wage growth are supporting the purchase market."

The FHA share of total applications decreased from 14.9 percent to 14.3 percent week-over-week and the VA share of total applications fell from 12.0 percent to 11.5 percent. The USDA share of total applications increased to 1.1 percent from 1.0 percent.

Contract interest rates for fixed rate mortgages (FRM) increased significantly during the week, returning to levels last seen in late 2014 and effective rates increased for all mortgage products.  The average contract interest rate for 30-year FRM with conforming loan balances ($417,000 or less) increased to 4.17 percent, the highest level since November 2014, from 4.02 percent.  Points increased to 0.38 from 0.33.  

Rates for 30-year FRM with jumbo loan balances (greater than $417,000) averaged 4.15 percent, the highest level since October 2014, with 0.37 point.  The previous week the rate averaged 4.01 percent, with 0.30 point.  

FHA-backed 30-year FRM had the highest rates since November 2014 at 3.90 percent, up from 3.77 percent.  Points decreased to 0.19 from 0.21.  

The average contract interest rate for 15-year fixed-rate mortgages increased 10 basis points to 3.37 percent, the highest level since November 2014.  Points dipped to 0.32 from 0.33.

The adjustable-rate mortgage (ARM) share of activity increased to 6.3 percent of total applications.  The average interest rate for 5/1 ARMs was 3.06 percent, up from 2.97 percent the previous week.  Points were unchanged at 0.50.

Data for both applications and rates are gathered by MBA through its Weekly Mortgage Applications Survey which has been conducted since 1990.  The survey covers over 75 percent of all U.S. retail residential mortgage applications with respondents that include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100 and interest rate information presumes mortgages with an 80 percent loan-to-value ratio and points that include the origination fee.