Mortgage application volume declined by 4% for the week ended May 27, even as the contract rate for the 30-year fixed-rate mortgage resumed its downward movement after a one week break, according to the Mortgage Bankers Association.
Almost all of that decline can be attributed to a 4% drop in refinance applications, the organization said. "Interest rates fell last week as incoming economic data was weaker than anticipated. Despite this drop in rates, the number of refinance applications fell. In fact, the last time mortgage rates were this low, refinance volume was more than 20% higher. It is likely that many borrowers still cannot qualify to refinance given the lack of equity in their homes," said Mike Fratantoni, MBA's vice president of research and economics.
The seasonally adjusted Purchase Index was unchanged from the previous week and on an unadjusted basis, this index is 7.6% higher than the same week in 2010.
The market share of refi applications fell to 65.7% from 66.8% one week prior. MBA tracks activity through its proprietary application index.
The average contract interest rate for 30-year fixed-rate mortgages decreased 11 basis points to 4.58% from 4.69%, with points increasing to 1.01 from 0.69 (including the origination fee) for 80% loan-to-value ratio loans. This is the lowest point for this rate since November 2010.
The average contract interest rate for the 15-year FRM was unchanged at 3.78%. Points increased to 1.07 from 1.04.
