Rising interest rates took a toll on mortgage applications again during the week ended May 8.  The Mortgage Bankers Association said that its Market Composite Index a measure of overall mortgage application volume, was down 3.5 percent on a seasonally adjusted basis from the week ended May 1 and down 3.0 percent unadjusted.  It was the third straight losing week for both the adjusted and unadjusted composites.

Most of the drop was because applications for refinancing lost 6 percent from its index level the previous week.  Fifty-one percent of all mortgage applications were for refinancing compared to 52 percent the week before.  This was the smallest share of applications for refinancing since May 2014. 

Applications for home purchase mortgages were almost flat compared to the previous week.  The seasonally adjusted Purchase Index dipped by 0.2 percent and the unadjusted index was up a scant 0.1 percent compared to the week ended May 1.  The unadjusted purchase Index was 12 percent higher than at the same time in 2014.  Applications for purchase mortgages set a new high dollar mark for the second week in a row rising to an average of $298,500.

Refinance Index vs 30 Yr Fixed

Purchase Index vs 30 Yr Fixed

The FHA share of total applications decreased to 13.8 percent from 14.0 percent and the VA share was unchanged at 11.9 percent. The USDA share of total applications increased to 0.9 percent from 0.8 percent the week before.

Both contract and effective rates were higher for all loan products than during the preceding week and all contract rates hit their highest levels since March.  The average contract rate for conforming 30-year fixed-rate-mortgages (FRM) with loan balances of $417,000 or less increased to 4.00 percent from 3.93 percent.  Points rose to 0.36 from 0.35.

Jumbo 30-year FRM, loans with balances over $417,000, had an average rate of 3.99 percent, an 8 basis point increase from the previous week.  Points jumped to 0.33 from 0.24.

The average contract interest rate for 30-year FRM backed by the FHA increased to 3.76 percent from 3.70 percent.  Points did decrease from 0.21 to 0.14.

The average contract interest rate for 15-year fixed-rate mortgages rose 4 basis points to 3.23 percent.  Points averaged 0.40, up from 0.30.

The share of applications that were for adjustable rate mortgages (ARMs) rose from 51 to 52 percent during the week while the average rate for 5/1 ARMs increased to 3.00 percent from 2.87 percent.  Average points increased to 0.46 from 0.33.

MBA's Weekly Mortgage Application Survey which has been conducted since 1990 covers over 75 percent of all U.S. retail residential mortgage applications.  Respondents include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100.  Interest rates are based on a loan with an 80 percent loan-to-value ratio and points include the origination fee.