Mortgage Applications Slightly Lower; Possible Holiday Effects

Mortgage application activity retreated again during the holiday-shortened week ended May 30.  The Mortgage Bankers Association (MBA) said that mortgage applications as measured by its Market Composite Index decreased during the week by 3.1 percent on a seasonally adjusted basis and were down 14 percent on a non-seasonally adjusted basis.  The week's results were adjusted to account for the Memorial Day holiday (but can't adjust for the fact that some Americans will have added a day or two to the long weekend for family vacations and the like).

The Refinance Index was 3 percent lower than during the week ended May 23 but the market share of refinancing increased to 53 percent from 52 percent of all applications.

Refinance Index vs 30 Yr Fixed

The seasonally adjusted Purchase Index fell 4 percent from the previous week and the unadjusted Purchase index was 15 percent lower than the week before and 17 percent below the index for the same week in 2013. 

Purchase Index vs 30 Yr Fixed

All products covered by MBA's Weekly Mortgage Applications Survey had lower contract interest rates and effective rates than the previous week and rates for most products were at their lowest levels in a year or more.

The average contract interest rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances ($417,000 or less) decreased to 4.26 percent from 4.31 percent, with points decreasing to 0.13 from 0.15.  The contract rate for jumbo 30-year FRM with balances in excess of $417000 decreased to 4.22 percent with 0.11 point from 4.23 percent with 0.16 point.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA fell 5 basis points to 3.99 percent and points decreased to -0.46 from -0.45. 

Fifteen-year FRM had an average rate of 3.39 percent compared to 3.42 percent the previous week.  Points increased to 0.07 from 0.06.

The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) decreased to 3.11 percent from 3.13 percent, with points decreasing to 0.05 from 0.19.  ARMs had an 8 percent share of mortgage applications, unchanged since the week ended May 2.

MBA's survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100.  Interest rate information is for loans with an 80 percent loan-to-value ratio and points include the origination fee.