Applications for Refis, Purchases Surge to Highest Point in 3 Years

There was absolutely no bad news out of the Mortgage Bankers Association's Weekly Mortgage Applications Survey this morning.  Results of the survey for the week ended June 8 showed that mortgage applications volume soared in every category.  The Market Composite Index which measures all application volume was up 18.0 percent on a seasonally adjusted basis and 30 percent on an unadjusted basis from the previous week.  While the previous week which ended June 1 was shortened by the Memorial Day holiday, that alone did not account for the surge in volume which sent the seasonally adjusted index to its highest level since May 2009.

 The Refinance Index was up 19 percent from the previous week, its highest level since April 2009.  Refinancing accounted for 79 percent of application activity compared to 78 percent the previous week. The seasonally adjusted Purchase Index was about 13 percent higher than a week earlier and the unadjusted index was up 23 percent from the previous week and was 4 percent higher than during the same week in 2011.

"Mortgage application volume increased sharply last week.  The increase was accentuated due to the comparison to the week including Memorial Day, but the level of refinance and total market activity is the highest since the spring of 2009," said Michael Fratantoni, MBA's Vice President of Research and Economics.  "Refinance volume increased as borrowers were able to lock in at mortgage rates below 4 percent, and purchase application volume was its highest level in over six months.  HARP volume has been steady in recent weeks at about 28 percent of refinance applications."

Purchase Index vs 30 Yr Fixed

Refinance Index vs 30 Yr Fixed

The average contract interest rate for conforming 30-year fixed-rate mortgages (FRM) increased to 3.88 percent with 0.43 point from 3.87 percent with 0.46 point.  Conforming loans are those with a balance under $417,500.  The rate for loans with balances above that limit, jumbo 30-year FRM, decreased from 4.13 percent to 4.12 percent with points increasing to 0.41 from 0.35.

FHA-backed 30-year FRM had an average rate of 3.23 percent with 0.48 point, up from 3.20 percent with 0.46 point the previous week.  The rate for 15-year FRM increased 3 basis points to 3.23 percent with points increasing to 0.48 from 0.46.

The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) remained unchanged at 2.78 percent, with points increasing to 0.49 from 0.40. The ARM share of activity remains around 5 percent of total applications, essentially unchanged from the previous week.

The effective rate of all of the above loans increased for the week.  All rates are given for loans with an 80 percent loan-to-value ratio and points include the origination fee.

MBA reports that during May the average loan size of all loans for home purchase was $243,733, up from $238,135 in April. The Pacific region had the largest loans for purchase at $357,978.  The average loan size for a refinance was $226,576, up from $219,664 in April with the largest of these loans made in the Pacific region as well, averaging $313,826. 

The weekly MBA 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.