Mortgage applications rise as lower rates draw buyers into the market
An increase in purchase activity drove the week-over-week rise in mortgage application volume as homebuyers entered the market while interest rates fell, according to the Mortgage Bankers Association.
There was a 2.7% increase in the MBA's Weekly Mortgage Applications Survey for the period ending May 3 compared with the previous week.
The seasonally adjusted purchase index increased 4% from one week earlier, while the unadjusted purchase index increased 5% compared with the previous week and was 5% higher than the same week one year ago.
"Average loan amounts also stayed elevated, with government purchase applications rising to the highest in the survey," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release. "Even with slower price appreciation in higher-priced markets, home prices are still rising enough to push average loan sizes higher. With purchase activity increasing and mortgage rate movements mostly unchanged, the refinance share of applications were at their lowest level since last November."
The refinance share of mortgage activity decreased to 37.9% of the total from 38.8% the previous week, although refi application volume rose by 1%.
Adjustable-rate loan activity increased to 6.4% from 6.2% of total applications, while the share of Federal Housing Administration-insured loan applications remained unchanged from 9.5% the week prior.
The share of applications for Veterans Affairs-guaranteed loans increased to 11.1% from 10.9% and the U.S. Department of Agriculture/Rural Development share remained unchanged from 0.6% the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased 1 basis point to 4.41%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350), the average contract rate decreased 4 basis points to 4.27%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased 5 basis points to 4.44%. For 15-year fixed-rate mortgages, the average remained unchanged from 3.81%, while the average contract interest rate for 5/1 ARMs increased 7 basis points to 3.88%.