Almost Two-Thirds of Applications Pegged as Refis in Week

Nearly three out of every four mortgage applications submitted during the week ended May 28 was for a refinancing, found the Mortgage Bankers Association's Market Composite Index. The MCI increased 0.9% on a seasonally adjusted basis from one week earlier, while on an unadjusted basis, the Index increased 0.3%. The dichotomy in the direction of the components of the MCI continued for the fourth consecutive week as the Refinance Index increased 2.4% from the previous week (remaining at its highest level since October 2009) as the seasonally adjusted Purchase Index decreased 4.1% from one week earlier, falling to its lowest point since April 1997. "Purchase applications are now almost 40% below their level four weeks ago, while the refinance share, at 74%, is at its highest level since December," said Michael Fratantoni, MBA's vice president of research and economics. "In addition, the ARM share dropped last week to its lowest level since March of this year, as borrowers took the opportunity to lock in at historically low fixed mortgage rates." The market share of adjustable-rate mortgage applications fell from 6.0% to 5.2%. The average contract interest rate for the 30-year fixed-rate mortgage increased by three basis points to 4.83% from 4.80% for the current week with points decreasing from 1.08 to 1.05 (including the origination fee) for loans with an 80% percent loan-to-value ratio, the association reported. The average contract interest rate for 15-year FRMs fell by 1 bp during the week to 4.24%. The average contract interest rate for one-year ARMs was up by 13 bps over the previous week, to 6.96% for this week.