Mortgage Applications Tumble In First Week of May

Despite lower mortgage rates, loan applications for the week ending May 8 fell 8.6% compared to the prior week, said the Mortgage Bankers Association on Wednesday. The average rate for a 30-year fixed-rate mortgage decreased to 4.76% from 4.79%.

The Market Composite Index, a seasonally-adjusted measure of mortgage loan application volume, fell to 895.6 in the week, decreasing from a 979.7 level one week prior. The four week moving average is also down 5.1%.

The weekly survey covers about half all U.S. retail residential mortgage applications, and has been conducted since 1990.  Respondents include mortgage bankers, commercial banks and thrifts.

Part of the weekly decline came from lackluster demand for refinancing loans, which have fallen from a peak in mid-April. The Refinance Index decreased 11.2% to 4588.6 this week, down from 5169.3 in the previous week. 

The share of refinancing loans accounted for 71.9% of total applications, compared to 74.4% in the previous week. The share of adjustable-rate mortgages (ARM) increased to 2.3% from 2.1% of total applications from the previous week.

The Purchase Index increased this week, but only by a modest 0.5% to 265.7, up from 264.3 one week earlier.