Mortgage application volume rose during the week ended June 2, increasing by 7.1 percent on a seasonally adjusted basis.  The Mortgage Bankers Association said its Market Composite Index, a measure of application volume was lower on a non-seasonally adjusted falling by 15 percent after an adjustment was made to account for the Memorial Day holiday, which reduced the week to four business days.

The Refinance Index increased 3 percent from the previous week although the share of refinancing was down by 0.2 percentage point to 42.1 percent.  The seasonally adjusted Purchase Index gained 10 percent from the Week ended May 26, rising to its highest level since May 2010. The unadjusted Purchase Index decreased 14 percent, and was 6 percent higher than the same week one year ago.

The FHA share of total applications increased to 10.6 percent from 10.5 percent the week prior and the VA share of total applications rose to 11.1 percent from 10.8 percent. Applications for USDA mortgages stayed with the 0.8 percent share they have had for many weeks.

Mortgage rates, both contract and effective, retreated again, putting all products at their lowest levels thus far in 2017. The average contract interest rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances ($424,100 or less) decreased to 4.14 percent, the lowest level since November, from 4.17 percent.  Points increased to 0.34 from 0.32.  

The jumbo version of the 30-year FRM, those with balances over $424,100, also were the lowest since November, at 4.08 percent with 0.21 point on average, compared to 4.11 percent with 0.30 point the previous week.

The average interest rate for FHA-backed 30-year FRM decreased to 4.01 percent from 4.03 percent, a rate last seen in December.  Points increased to 0.39 from 0.32.

Fifteen year FRM had an average rate of 3.39 percent, down from 3.42 percent.  Points increased to 0.43 from 0.39.  This was the lowest rate since November as well.

The percentage of loan applications that were for adjustable rate mortgages (ARMs) declined to 7.4 percent from 7.7 percent. The average contract interest rate for 5/1 ARMs was the lowest since November, 3.19 percent, down from 3.22 percent, and points dipped to 0.27 from 0.33.

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 interest rate information is based on loans with an 80 percent loan-to-value ratio and points that include the origination fee.