Purchase Mortgage Gain Fails to Fill Refi Gap

Mortgage application volume decreased for the second consecutive week as the growing pool of purchase mortgage applications just missed covering the gap from declining refinance activity. The Mortgage Bankers Association said its Market Composite Index, a measure of application activity, dipped 0.1 percent on a seasonally adjusted basis during the week ended April 28, and declined 1.0 percent unadjusted.

Refinancing did not maintain last week's flurry of activity.  The Refinance Index lost 5 percent when compared to the week ended April 21 and refinancing applications fell back to a 41.6 percent share from 44 percent the previous week.

The seasonally adjusted Purchase Index increased 4 percent from a week earlier and grew by 5 percent unadjusted.  It was also 5 percent higher than during the same week in 2016.

The FHA share of total applications increased to 10.4 percent from 10.0 percent and the VA's share was 10.8 percent, down from 10.9 percent.  USDA applications were unchanged at an 0.8 percent share.

Contract interest rates all rose when compared to the previous week although not all effective rates followed suit.  The average contract interest rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances ($424,100 or less) increased to 4.23 percent from 4.20 percent.  Points dropped to 0.32 from 0.37 and the effective rate was higher than the prior week.

The contract interest rate for jumbo 30-year FRM, those with balances greater than $424,100, increased to 4.18 percent from 4.15 percent.  Points dipped to 0.23 from 0.27 and the effective rate increased.  

FHA-backed 30-year FRM had an average increase of 3 basis points in its contract rate, to 4.06 percent.  Points fell to 0.24 from 0.34.  The effective rate was unchanged from a week earlier.

The average rate for 15-year FRM was 3.51 percent with 0.32 point.  The previous week the rate averaged 3.46 percent, with 0.50 point. The effective rate was unchanged.

The 5/1 adjustable rate mortgage (ARM) had an average contract interest rate that increased to 3.29 percent from 3.22 percent, with points decreasing to 0.14 from 0.18. The effective was also higher. The ARM share of activity decreased to 8.4 percent of total applications.

MBA's Weekly Mortgage Applications Survey has been conducted since 1990 and 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 is based on loans with an 80 percent loan-to-value ratio and points that include the origination fee.