It was only by a fraction, but mortgage application activity was up for the third straight time during the week ended May 16.  The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of application volume, inched up 0.9 percent on a seasonally adjusted basis and an even narrower 0.4 percent unadjusted when compared to the week ended May 9. 

The Refinancing Index rose 4 percent from the previous week, also a third consecutive increase.  Fifty-two percent of all applications were for refinancing compared to 50 percent the week before.  The refinancing share hit a five-year low of 49 during the week ended May 2. 

Refinance Index vs 30 Yr Fixed

The unadjusted Purchase Index decreased 3 percent compared to the previous week and was 12 percent below the index for the same week in 2013.  The Purchase Index was also down 3 percent on a seasonally adjusted basis.

Purchase Index vs 30 Yr Fixed

 "Renewed concerns about the state of the global economy, particularly in Europe, led to a flight to quality to US Treasury securities, thereby pushing interest rates down in the US," said Mike Fratantoni, MBA's Chief Economist. "Rates on conforming loans hit 6 month lows and jumbo rates hit 12 month lows. Refinance volume picked up somewhat as a result, but it still remains more than 65 percent below last year's pace. Purchase volume continues to run more than 10 percent below last year's pace."

The average contract interest rate for a conforming 30-year fixed rate mortgage (FRM) with a principal balance of $417,000 or less decreased to 4.33 percent from 4.39 percent with points easing to 0.20 from 0.22.  This was the lowest conforming 30 year FRM since last November.  The effective rate for this and all other rates quoted also decreased.

Jumbo 30-year FRM with balances above $417,000 had an average rate of 4.24 percent, 5 basis points lower than the previous week and the lowest rate since May 2013.  Points decreased to 0.1 from 0.16.

Rates for both FHA-backed 30-year FRM and for 15-year conventional mortgages fell back to October levels.  FHA loans had an average rate of 4.06 percent with -0.39 point compared to 4.09 percent with --0.17 point the previous week and the 15-year rate was 3.43 percent with 0.15 point, down from 3.48 percent with 0.12 point.

The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) decreased to 3.14 percent from 3.17 percent, with points increasing to 0.29 from 0.24.  ARMs maintained the same 8 percent share of applications as the previous week.

MBA's Weekly Mortgage Applications Survey has been conducted since 1990 and 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 and rates are quoted for loans with an 80 percent loan-to-value ratio.  Points include the origination fee.