Applications for both purchasing and refinancing homes dropped during the week ended May 10 as interest rates reversed the downward trend of the previous few weeks.  According to the Weekly Mortgage Applications Survey conducted by the Mortgage Bankers Association, the Market Composite Index, a measure of application activity, rose 7.3 percent on a seasonally adjusted basis from the week ended May 3 and was up 7 percent on a non-adjusted basis.

The Refinance Index fell 8 percent from the previous week and the seasonally adjusted Purchase Index was down 4 percent.  The unadjusted Purchase Index also lost 4 percent on a week-over-week basis but was 10 percent higher than in the same week in 2012.   Applications for refinancing made up 76 percent of the total, the same share as in the previous week.

Purchase Index vs 30 Yr Fixed

Refinance Index vs 30 Yr Fixed

MBA said contract interest rates for every loan type it tracks rose during the week and the effective rate rose for most.  The contract rate for conforming 30-year fixed-rate mortgages (FRM) (balances of $417,500 or less) increased for the first time in eight weeks to an average of 3.67 percent with 0.41 point.  The previous week the average was 3.59 percent with 0.33 point.   

The rate for jumbo 30-year FRM increased to 3.87 percent from 3.79 percent and points increased from 0.20 to 0.25.  Jumbo loans have balances exceeding $417,500.  The average rate for 15-year FRM increased from 2.81 percent with 0.29 point to 2.88 percent with 0.31 point.

Thirty-year FRM backed by FHA had a rate that increased by 8 basis points to 3.43 percent while points decreased to 0.16 from 0.57.  This was the sole product for which the effective rate decreased.

Applications for adjustable rate mortgages (ARMs) remained at a 4 percent share of all activity during the week.  The average rate for the 5/1 ARM increased two basis points to 2.55 percent and points increased from 0.15 to 0.23. 

MBA's survey has been conducted since 1990 and covers over 75 percent of all U.S. retail residential mortgage applications.  Base period and value for all indices is March 16, 1990+100.  Rates quoted are for loans with an 80 percent loan-to-value ratio and points include the origination fee.