Refi Apps at 5-Month Lows

Interest rates increased to the highest levels since last fall and the volume of mortgage applications responded as might be expected, falling across the board.  The Mortgage Bankers Association (MBA) said its Market Composite Index dropped 5.5 percent on a seasonally adjusted basis during the week ended June 12 and was down 6 percent unadjusted.

Refinancing also decreased from the week before.  Its index fell 7 percent and the share of all applications that were for refinancing went down to 48.5 percent from 49 percent.  The seasonally adjusted Purchase Index decreased 4 percent and the unadjusted Purchase Index 6 percent compared with the previous week.  The unadjusted Purchase Index was 15 percent higher than the same week one year ago.

Refinance Index vs 30 Yr Fixed

Purchase Index vs 30 Yr Fixed

"Rising rates continue to create volatility in weekly mortgage applications activity," Mike Fratantoni, MBA's Chief Economist said.  "The 10-year Treasury hit 2.5 percent last week and our survey's 30-year fixed rate of 4.22 percent is at its highest level since October 2014. The refinance index dropped to the lowest level since January 2015 as rates continued to increase."

Applications for government-backed loans as a whole were down.  Those for FHA loans eased down from a 14.3 percent share to 14.2 percent and USDA applications decreased from a 1.1 percent share during the week ended June 5 to 0.9 percent. Only VA loan applications held constant, keeping an 11.5 percent share. 

Both the average contract rate and effective rate increased for all loans tracked by the survey.  Thirty-year fixed-rate mortgages (FRM) with conforming loan balances ($417,000 or less) saw an average contract interest rate of 4.22 percent, up from 4.17 percent the previous week while points jumped to 0.46 from 0.38.  

The jumbo 30-year FRM with loan balances greater than $417,000 saw a rate increase of 3 basis points to 4.18 percent.  Points dipped to 0.36 from 0.37.

The average contract interest rate for 30-year FRM backed by the FHA increased to 4.00 percent from 3.90 percent.  Points rose to 0.20 from 0.19.

The rate for 15-year FRM went from 3.37 percent to 3.43 percent during the week.  Points ticked up to 0.33 from 0.32.

The adjustable-rate mortgage (ARM) share of activity increased to 6.5 percent of total applications from a 6.3 percent share the week before.  The average contract interest rate for 5/1 ARMs moved to 3.15 percent from 3.06 percent and points increased to 0.52 from 0.50.

MBA's Weekly Mortgage Applications Survey, which the company has conducted since 1990, 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 information presumes mortgages with an 80 percent loan-to-value ratio and points that include the origination fee.