Mortgage Application Volume Up, Rates Move to New Record Lows

Applications for refinancing bounced back slightly during the week ended June 1, buoying overall application volume.  The seasonally adjusted Weekly Mortgage Applications Survey conducted by the Mortgage Bankers Association (MBA) rose 1.3 percent from the week ended May 25.  The survey results were adjusted to account for the Memorial Day holiday.  On an unadjusted basis the index fell 9 percent.

The Refinance Index increased 2 percent from the previous week to the highest level since early February.  Applications for refinancing made up 78 percent of all mortgage applications, the highest share in over three months, up from 77 percent the week before. 

The seasonally adjusted Purchase Index decreased only slightly from one week earlier returning to levels last seen in April while the unadjusted Purchase Index fell 13 percent and was 3 percent lower than the same week in 2011.

Purchase Index vs 30 Yr Fixed

Refinance Index vs 30 Yr Fixed

Rates for fixed rate products continued to fall.  The average contract rate for 30-year fixed-rate mortgages (FRM) with conforming balances of $417,500 or less decreased from 3.91 percent to 3.87 percent, a new low, with points unchanged at 0.46. The effective rate also decreased.

The rate for 30-year FRM with jumbo balances over $417,500 fell 10 basis points to 4.13 percent with points decreasing from 0.40 to 0.35.  This was the lowest jumbo rate in the history of the survey. The effective rate decreased from last week.

FHA-backed 30-year FRM rates were unchanged, remaining at the historic low rate of 3.70 percent with points increasing to 0.60 from 0.59. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.20 percent, another new low, from 3.23 percent, with points increasing to 0.46 from 0.39. The effective rate decreased from last week.

The only rate that increased during the week was for 5/1 adjustable rate mortgages (ARMs) which were up an average of a single basis point to 2.78 percent with points increasing to 0.40 from 0.38. The effective rate increased from last week.   The ARM share of activity remained at about 5 percent of total applications.

Interest data is based on average contract rates for mortgages with an 80 percent loan to value ratio and points include the origination fee.

Looking back at May data, MBA said that 85 percent of home purchase applications were for fixed-rate 30-year loans, 7 percent for 15-year fixed loans and 6 percent for ARMs.  Two percent of purchase applications were for fixed-rate mortgages with amortization schedules other than 15 and 30-year terms. The number of home purchase applications with a 15-year fixed term was at its highest level of the year as a share of all home purchase applications, but the number of 15-year fixed refinance applications was at its second lowest level of the year as a share of all refinance applications.

MBA's survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.  Respondents include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100.