Refinancing up as Jumbo Rates hit 5-Year Low
Refinancing gained ground as interest rates fell during the week ended June 17. The Mortgage Bankers Association (MBA) reported that refinancing rebounded to a 57.7 percent share of all applications compared to 55.3 percent the previous week as interest rates eased down, at least one product setting a new five-year low.
The Market Composite Index, a measure of total mortgage loan application volume, was up 2.9 percent on a seasonally adjusted basis from the previous week and increased 2.0 percent on an unadjusted basis. The increase was driven by MBA's Refinancing Index which increased 7 percent from the week ended June 10. The seasonally adjusted Purchase Index decreased 2 percent and the unadjusted Purchase Index was down 4 percent from a week earlier while the unadjusted index was 12 percent higher than during the same week in 2015.
Refi Index vs 30yr Fixed
Purchase Index vs 30yr Fixed
The FHA share of total applications dipped to 11.7 percent from 11.8 percent. The VA and USDA shares of applications were both unchanged, at 11.1 percent and 0.6 percent respectively.
Contract rates were lower or unchanged for all fixed rate products and their effective rates all declined. The average contract interest rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances ($417,000 or less) decreased to its lowest level since May 2013, 3.76 percent, from 3.79 percent, with points increasing to 0.33 from 0.32.
One has to look back to January 2011 to find a rate comparable to the one reported for jumbo 30-year FRM last week. Loans with balances greater than $417,000 had an average contract rate of 3.70 percent, down five basis points from the week ended June 10. Points increased to 0.28 from 0.26.
The average contract interest rate for 30-year FRM backed by the FHA was unchanged at 3.61 percent, with points decreasing to 0.24 from 0.27.
The average contract interest rate for 15-year FRM decreased to 3.04 percent from 3.06 percent, with points increasing to 0.36 from 0.34
The adjustable rate mortgage (ARM) share of mortgage applications increased to 5.7 percent from 5.3 percent of total applications. The average contract interest rate for 5/1 ARMs rose, increasing from 2.87 percent to 2.92 percent. Points decreasing to 0.21 from 0.26 and the effective rate was higher.
MBA's Weekly Mortgage Applications Survey, which has been 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 assumes a mortgage with a 75 percent loan-to-value ratio and points that include the origination fee.