Purchase Loan Volume up, Loan Size at Record High

Mortgage applications increased last week driven by a significant uptick in applications for purchase mortgages. Refinance volume rose only fractionally.  Overall, applications for mortgages, as measured by the Mortgage Bankers Association's (MBA's) Market Composite Index increased 2.3 percent during the week ended May 20 on a seasonally adjusted basis and were up 2.0 percent unadjusted.

The MBA said refinancing applications were only 0.4 percent higher than during the week ended May 23 while applications for purchase money mortgages were up 5.0 percent on a seasonally adjusted basis and 4 percent unadjusted.  The unadjusted index was 17 percent higher than during the same week in 2015.  The size of an average purchase loan application reached the highest in the history of the MBA survey, $307,700.

Refi Index vs 30yr Fixed

Purchase Index vs 30yr Fixed

Refinancing fell one percentage point to 53.7 percent of all applications.  The FHA mortgage share rose to 12.7 percent from 12.5 percent the previous week while the VA share dropped from 12.1 percent to 11.5 percent.  The USDA loan portion was unchanged at 0.7 percent.

Mortgage interest rates crept higher on both a contract and effective rate during the week.  The average interest rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances of $417,000 was 3.85 percent with 0.37 points.  A week earlier the rate was 3.82 percent with 0.34 point.

The rate for the jumbo version of the 30-year FRM (balances above $417,000) jumped by 8 basis points to 3.82 percent.  Points eased back from 0.29 to 0.27.

FHA-backed 30-year FRM had an average contract rate of 3.70 percent with 0.27 point.  The previous week the rate was 3.63 percent with 0.28 point.

There was a 4 basis point increase in average rates for 15-year FRM.  Points were up from 0.38 to 0.40.

Adjustable rate mortgages (ARMs) had the largest increase during the week of any mortgage type, jumping 15 basis points for the popular 5/1 ARM to 3.09 percent.  Points rose to 0.31 from 0.30.  Despite the higher rates the share of applications for ARMs increased slightly from 5.5 percent to 5.7 percent.

MBA gathers application volume data from its Weekly Mortgage Applications Survey which it has conducted since 1990.  The survey covers over 75 percent of all U.S. retail residential mortgage applications and respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100.  Interest rate information is based on loans with an 80 percent loan to value ratio and points that include the origination fee