Holiday Skews Mortgage Apps, but Rates Generally Lower

The Mortgage Bankers Association (MBA) reported another of those holiday-centered weeks of mortgage application activity where it is anyone's guess what really happened.  The week ended June 3 started with the Memorial Day Holiday and which, along with the adjustment MBA adds in to account for the holiday, leaves seasonally adjusted numbers giving a very different picture than those that are unadjusted.

MBA's Market Composite Index increased 9.3 percent on a seasonally adjusted basis from the week ended May 27.  However, on a non-seasonally adjusted basis the index decreased 13 percent. 

The Refinance Index is unadjusted and unequivocal, it increased 7 percent from the previous week. The seasonally adjusted Purchase Index increased 12 percent from one week earlier while unadjusted it was down 12 percent. The unadjusted index was 6 percent lower than the same week one year ago.

Refi Index vs 30yr Fixed

Purchase Index vs 30yr Fixed

The refinancing share of mortgage activity decreased to 53.8 percent of total applications from 54.3 percent the previous week. The FHA loan share rose from 12.5 percent to 13.0 percent while the VA's share dropped to 11.5 percent from 12.0 percent. The USDA share of total applications remained unchanged at 0.7 percent.

With the exception of FHA-backed 30-year fixed-rate mortgages (FRM) interest rates were down from a week earlier on an effective basis and contract rates were either unchanged or lower.  For FHA loans the contract rate increased to 3.71 percent with 0.23 point from 3.65 percent with 0.26 point and the effective rate was higher.

The average contract interest rate for 30-year FRM with conforming loan balances ($417,000 or less) decreased to 3.83 percent from 3.85 percent.  Points eased to 0.33 from 0.36.  

Thirty-year FRM with jumbo loan balances (greater than $417,000) were unchanged at 3.81 percent.  Points fell by 0.10 to 0.25.  The rate for 15-year FRM dipped 1 basis point to 3.11 percent and points fell to 0.35 from 0.40.

The adjustable-rate mortgage (ARM) share of activity remained unchanged at 5.0 percent of total applications while the rate for the most popular product, the 5/1 ARMs decreased to 2.96 with 0.19 point from 3.00 percent with 0.44 point

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