Mortgage applications rise 1.1% as rates stabilize

Mortgage shoppers submitted 1.1% more applications for the week ending May 9 than they did at the end of April, according to the Mortgage Bankers Association. The trade group's Refinance Index also fell 0.4%, as volatility driven by economic uncertainty appears to fade. 

Consumers watched rates for all but 15-year fixed-rate and jumbo mortgages rise, led by the average contract interest rate for 30-year FRMs rising two basis points to 6.86%. Rates stabilized last week on small market movements in reaction to the Federal Open Market Committee's inaction, said Mike Fratantoni, senior vice president and chief economist at the MBA.

"The news for the week was the growth in purchase applications, up 2.3 percent and almost 18 percent higher than last year's pace," said Fratantoni in a press release. 

Refinance activity is also 44% higher than the same time a year ago, when the average 30-year FRM sat around 7.08%. Additionally, government-sponsored purchase loan application volume was up 40% from the year ago period.

The overall activity suggests the traditionally busier homebuying season is chugging along, although some other data points to a muted pace. Optimal Blue recently found lock activity for April rising from both the month and year ago periods, but purchase locks lagging on an annual basis, despite lower rates. 

How did government-backed lending perform last week?

Similar to another Optimal Blue finding, borrowers are migrating toward Federal Housing Administration-backed loans, with those mortgages making up an increasing 17.4% of total applications. The average 30-year FHA rate however rose 3 basis points last week to 6.59%.

The share of Department of Veterans Affairs-insured loan applications also ticked up a basis point to 13.4%. Among the MBA's Weekly Mortgage Applications Survey, the seasonally-adjusted VA Refinance Index however was the lone government index to fall backwards.

Government-backed adjustable-rate mortgage applications climbed, although their 7.4% share of all home loan applications was down weekly. The rate for 5/1 ARMs grew the most this week, from 5.97% last week to 6.09%.