Mortgage Apps Enjoy Post Holiday Bounce

Americans got back to work during the week ended June 5 and mortgagernapplications rebounded significantly. rnVolume made up the ground lost during the previous holiday shortenedrnweek but only recovered a small part of the declines suffered in the five weeksrnthat preceded it. </p

The Mortgage Bankers Association said its Market Composite Index, arnmeasure of application volume rose 8.4 percent on a seasonally adjusted basis fromrnthe week ended May 29 and was up 19 percent unadjusted.  The previous week’s data contained an adjustmentrnfor the Memorial Day holiday.</p

The Refinance Index increased 7 percentrnfrom the earlier week but the refinancing share of all applications remained atrn49 percent. The seasonally adjusted Purchase Index rose 10 percent and the unadjustedrnPurchase Index was up 20 percent compared to the previous week.  Volume was 15 percent higher than the samernweek one year ago.</p

Refinance Index vs 30 Yr Fixed</p

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Purchase Index vs 30 Yr Fixed</p

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Mike Fratantoni, MBA’s Chief Economist acknowledged the effectrnholidays are having on MBA’s data.  “Mortgagernapplication volume rebounded strongly in the week following the Memorial Day holiday, indicating that the holiday had arnlarger impact on business activity than originally assumed,” he said. “Comparing volume over the past twornweeks, purchase activity is up over 6 percent, while refinance activity is down 5 percent. Strong job gains in May and initialrnsigns of wage growth are supporting the purchase market.”</p

The FHA share of totalrnapplications decreased from 14.9 percent to 14.3 percent week-over-week and the VA sharernof total applications fell from 12.0 percent to 11.5 percent. The USDA share of totalrnapplications increased to 1.1 percentrnfrom 1.0 percent. </p

Contract interest rates for fixed raternmortgages (FRM) increased significantly during the week, returning to levelsrnlast seen in late 2014 and effective rates increased for all mortgagernproducts.  The average contract interestrnrate for 30-year FRM with conforming loan balancesrn($417,000 or less) increased to 4.17 percent,rnthe highest level since November 2014, from 4.02 percent.  Points increased to 0.38 from 0.33.rn </p

Rates for 30-year FRM with jumbo loan balancesrn(greater than $417,000)rnaveraged 4.15 percent, the highest level since October 2014,rnwith 0.37 point.  The previous week thernrate averaged 4.01 percent, with 0.30rnpoint.  </p

FHA-backed 30-year FRM had the highestrnrates since November 2014 at 3.90 percent, uprnfrom 3.77 percent.  Points decreased to 0.19 from 0.21.  </p

The average contract interest rate for<b15-year fixed-rate mortgages increased 10 basis points to 3.37 percent, the highest level since November 2014. rnPoints dipped to 0.32 from 0.33.</p

The adjustable-rate mortgagern(ARM) share of activity increasedrnto 6.3 percent of total applications.  The average interest rate for 5/1 ARMs was 3.06rnpercent, up from 2.97 percent the previous week.  Points were unchanged at 0.50.</p

Data for both applications and rates arerngathered by MBA through its Weekly Mortgage Applications Survey which has beenrnconducted since 1990.  The surveyrncovers over 75 percent of all U.S. retail residential mortgage applicationsrnwith respondents that include mortgagernbankers, commercial banks and thrifts. Base period and value for allrnindexes is March 16, 1990=100 andrninterest rate information presumes mortgages with an 80 percent loan-to-valuernratio and points that include the origination fee.

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