Low Rates and Spring Buying Boosting Mortgage Apps

Borrowers responded to some of the lowest interest rates in severalrnmonths by stepping up applications for mortgage financing.  The Mortgage Bankers Association (MBA) saidrnthat its Market Composite Index, a measure of mortgage application volume,<bincreased 2.3 percent on a seasonally adjusted during the week ended April 17rnwhen compared to the previous week.  Onrnan unadjusted basis applications were 3 percent higher than during the weekrnended April 10. </p

The Refinancing Index rose 1 percent from the previous week but the sharernof all applications that were for refinancing dropped from 58 percent to 56rnpercent, the lowest share for that sector since October 2014.  The seasonally adjusted Purchase Index increasedrn5 percent from the previous week.  Thernunadjusted Purchase Index was up 6 percent week-over-week and was 16 percentrnhigher than during the same week in 2014.</p

Refinance Index vs 30 Yr Fixed</p

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Purchase Index vs 30 Yr Fixed</p

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“Purchasernapplications increased for the fourth time in five weeks as we proceed further into the spring home buying season,”rnsaid Mike Fratantoni, MBA’s Chief Economist.rn “Despite mortgagernrates below four percent, refinancernactivity increased less than one percent from the previous week,”</p

Eleven percent of mortgage applicationsrnduring the week were for VA mortgages, down from 11.1 percent the previous weekrnand 13.6 percent were for FHA loans, a 10 basis point increase.  The USDA share of applications remained atrn0.8 percent.</p

Interestrnrates for all fixed rate mortgage products declined during the week as did therneffective rates.  The average contractrnrate for 30-year fixed-rate mortgages (FRM) with conforming loan balances ofrn$417,000 or less declined to its lowest level since January of this year.  The rate was 3.83 percent with 0.32 pointrncompared to 3.87 percent with 0.38 point during the prior week.</p

The rate forrnjumbo 30-year FRM (loan balances in excess of $417,000) was 3.83 percent, downrnone basis point from the previous week. rnPoints decreased to 0.22 from 0.35 point.</p

The average contract interest rate forrn30-year FRM backed by the FHA decreased to 3.65 percent, its lowest level since May 2013, from 3.67 percent,rnwith points decreasing to 0.12 from 0.23.</p

Fifteen-year FRM also reached the lowestrnaverage level since last January at 3.16 percent with 0.24 point.  The rate a week earlier was 3.16 percent withrn0.29 point.</p

The adjustable-rate mortgagern(ARM) share of activity increased to 5.5 percent of total applications from 5.4 percent.  The average contract interest rate for 5/1rnARMs increased to 2.89 percent from 2.82 percent, with points decreasing to 0.29 from 0.40.  The effective rate also increased. </p

MBA’s application data is gathered throughrnits Weekly Mortgage Application Survey which the Association has conductedrnsince 1990.  The survey covers over 75 percentrnof all U.S. retail residential mortgage applicationsrnand respondents include mortgagernbankers, commercial banks and thrifts. Basernperiod and value for all indexes is March 16,rn1990=100; interest rate information assumes a loan with an 80 percent loanrnto value ratio and points include the origination fee..

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