Purchase mortgage applications continue to rebound

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Purchase mortgage activity rose for the third consecutive week, although the total volume was flat compared with the previous seven-day period, according to the Mortgage Bankers Association.

The MBA's Weekly Mortgage Applications Survey for the week ending May 1 was up 0.1% from the previous week, led by a 6% rise in the seasonally adjusted purchase index. The unadjusted purchase index increased 7% compared with the previous week.

"Purchase volume increased for the third week in a row, led by strong growth in Arizona, Texas and California," MBA Chief Economist Mike Fratantoni said in a press release. "Although purchase activity remains almost 19% below year-ago levels, this annualized deficit has decreased as more states reopen amidst the apparent, pent-up demand for home buying."

Although mortgage rates continued to drop, refinance business slowed as well.

The refinance index decreased 2% from the previous week, but was 210% higher than the same week one year ago. The refinance share of mortgage activity decreased to 70% of total applications from 71.6% the previous week.

"Mortgage application volume was unchanged last week, even as the 30-year fixed rate mortgage declined to 3.4% — a new record in the MBA's survey," Fratantoni said. "Despite lower rates, refinance applications dropped, as many lenders are offering higher rates for refinances than for purchase loans, and others are suspending the availability of cash-out refinance loans because of their inability to sell them to Fannie Mae and Freddie Mac."

Adjustable-rate mortgage activity increased to 3% from 2.9% of total applications, while the share of Federal Housing Administration-insured loan applications decreased to 11.1% from 11.5% the week prior.

The share of applications for Veterans Affairs-guaranteed loans was unchanged at 13.3% and the U.S. Department of Agriculture/Rural Development share remained unchanged as well from 0.5% the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased 3 basis points to 3.4%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400), the average contract rate decreased 3 basis points to 3.69%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased 2 basis points to 3.37%. For 15-year fixed-rate mortgages, the average decreased 5 basis points to 2.93%. The average contract interest rate for 5/1 ARMs decreased to 3.2% from 3.29%.

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Mortgage applications Purchase Refinance Mortgage rates Mortgage Bankers Association FHA The VA