Driven by the continuing drop in mortgage rates, application volume increased 8.2% on a seasonally adjusted basis for the week ending May 6. But the number of refinance applications submitted is still well below levels seen last fall, according to figures compiled by the Mortgage Bankers Association.
Rates on the 30-year fixed rate loan dropped for the fourth consecutive week, as the Federal Reserve continued its QE2 program, explained Michael Fratantoni, MBA's vice president of research. "Over this four-week span, the refinance index has increased by about 18%,” he said. “Despite the recent increases however, refinance application volumes remain more than 50% below levels seen last fall."
The Refinance Index increased 9% from the previous week, and the market share of refi applications increased to 63.1% from 62.7% one week prior. MBA tracks activity through its proprietary application index.
The seasonally adjusted Purchase Index increased by 6.7%, but on an unadjusted basis, this index is 25.8% lower than the same week in 2010.
The average contract interest rate for a 30-year fixed-rate mortgage decreased 9 basis points to 4.67 % from 4.76%, with points increasing to 1.10 from 0.75 (including the origination fee) for 80% loan-to-value ratio loans.
According to Fratantoni, the four-week decline has cut this rate by 31 basis points and it is down 46 basis points from its highest point this year.
The average contract rate for a 15-year FRM decreased 15 basis points to 3.81% from 3.96%. Points increased to 1.05 from 0.82.
