Purchase Applications Fare Better Amid Rising Rates

Risingrninterest rates took a toll on mortgage applications again during the week endedrnMay 8.  The Mortgage Bankers Association saidrnthat its Market Composite Index a measure of overall mortgage applicationrnvolume, was down 3.5 percent on a seasonally adjusted basis from the week endedrnMay 1 and down 3.0 percent unadjusted. rnIt was the third straight losing week for both the adjusted andrnunadjusted composites.</p

Mostrnof the drop was because applications for refinancing lost 6 percent from itsrnindex level the previous week.  Fifty-onernpercent of all mortgage applications were for refinancing compared to 52rnpercent the week before.  This was the smallestrnshare of applications for refinancing since May 2014.  </p

Applicationsrnfor home purchase mortgages were almost flat compared to the previousrnweek.  The seasonally adjusted PurchasernIndex dipped by 0.2 percent and the unadjusted index was up a scant 0.1 percentrncompared to the week ended May 1.  Thernunadjusted purchase Index was 12 percent higher than at the same time inrn2014.  Applications for purchase mortgagesrnset a new high dollar mark for the second week in a row rising to an average ofrn$298,500.</p

Refinance Index vs 30 Yr Fixed</p

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Purchase Index vs 30 Yr Fixed</p

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The<bFHA share of total applications decreased to 13.8 percent from 14.0 percent andrnthe VA share was unchanged at 11.9 percent. The USDA share of total applicationsrnincreased to 0.9 percent from 0.8 percent the week before. </p

Bothrncontract and effective rates were higher for all loan products than during thernpreceding week and all contract rates hit their highest levels since March.  The average contract rate for conforming 30-yearrnfixed-rate-mortgages (FRM) with loan balances of $417,000 or less increased torn4.00 percent from 3.93 percent.  Points rosernto 0.36 from 0.35. </p

Jumborn30-year FRM, loans with balances over $417,000, had an average rate of 3.99rnpercent, an 8 basis point increase from the previous week.  Points jumped to 0.33 from 0.24. </p

Thernaverage contract interest rate for 30-year FRM backed by the FHA increased torn3.76 percent from 3.70 percent.  Pointsrndid decrease from 0.21 to 0.14.</p

Thernaverage contract interest rate for 15-year fixed-rate mortgages rose 4 basisrnpoints to 3.23 percent.  Points averagedrn0.40, up from 0.30. </p

Thernshare of applications that were for adjustable rate mortgages (ARMs) rose fromrn51 to 52 percent during the week while the average rate for 5/1 ARMs increased torn3.00 percent from 2.87 percent.  Averagernpoints increased to 0.46 from 0.33. </p

MBA’srnWeekly Mortgage Application Survey which has been conducted since 1990 covers overrn75 percent of all U.S. retail residential mortgage applications.  Respondents include mortgage bankers, commercialrnbanks and thrifts.  Base period and valuernfor all indexes is March 16, 1990=100. rnInterest rates are based on a loan with an 80 percent loan-to-valuernratio and points include the origination fee.

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