Waning enthusiasm for refinancing again drove the volume of mortgage applications down during the week ended May 24. The Mortgage Bankers Association (MBA) reported that its Market Composite Index, a measure of mortgage application volume, was down 8.8 percent on a seasonally adjusted basis from the week ended May 17 and 9 percent on an unadjusted basis.
Note: This report shows rate movements from the previous week. Rates moved sharply higher again yesterday, READ: [ Mortgage Rates Vault Catastrophically Higher : Tuesday, May 28, 2013 ]
The MBA's Refinancing Index had the largest negative move of the year, falling 12 percent from the volume the previous week to its lowest level since last December. The refinancing share of applications dropped to 71 percent from 74 percent, the lowest level since April 2012.
Applications for purchase mortgages did rise during the week; the Purchase Index was up 3 percent on a seasonally adjusted basis from the previous week and 2 percent on an unadjusted basis. The unadjusted version of the Index was 14 percent higher than during the same week in 2012.
"Refinance applications fell for the third straight week bringing the refinance index to its lowest level since December 2012 as mortgage rates increased to their highest level in a year," said Mike Fratantoni, MBA's Vice President of Research and Economics. "Rates rose in response to stronger economic data and an increasing chance that the Fed may soon begin to taper their asset purchases."
Contract and effective interest rates increased during the week for all fixed rate mortgages (FRM). The average rate for 30-year FRM with conforming loan balances of $417,500 or less increased 12 basis points to 3.90 percent, the highest rate since May 2012. Points were unchanged at 0.39. The jumbo version of the 30-year FRM (balances over $417,500) increased from 3.93 percent with 0.36 point to 4.07 percent with 0.27 point. This was the highest rate since August 2012.
The average contract interest rate for FHA-backed 30-year FRM increased to 3.62 percent from 3.53 percent with points increasing to 0.27 from 0.13. This was the highest rate for an FHA loan since last August.
The rate for 15-year FRM increased to 3.10 percent with 0.30 point from 2.96 percent with 0.32 point. The new rate was also the highest for a 15-year FRM since last August.
The 5/1 adjustable rate mortgage (ARM) remained unchanged at 2.60 percent; points increased from 0.23 to 0.24 but the effective rate declined. ARMs of all types had a 5 percent share of mortgage applications during the week, a slight increase from the previous period.
The MBA's Weekly Mortgage Applications Survey is conducted among mortgage bankers, commercial banks, and thrifts. It has been conducted since 1990 and covers over 75 percent of all U.S. retail residential mortgage applications. Base period and value for all indexes is March 16, 1990=100 and interest rate data is for loans with 80 percent loan to value ratios. Points include the origination fee.
