Mortgage applications surged by 10.3 percent during the week ended June 6. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of application volume increased by that amount on a seasonally adjusted basis and was up 22 percent compared to the previous week which had been shortened by the observed Memorial Day holiday.
The increase was across the board with applications for both purchase mortgages and refinancing making healthy gains. The Refinance Index was up 11 percent from the previous week and the seasonally adjusted Purchase Index rose 9 percent. The unadjusted Purchase Index was 19 percent higher than the week before but 13 percent below the level during the same week in 2013. The refinance share of applications increased to 54 percent from 53 percent.
Refinance Index vs 30 Yr Fixed
Purchase Index vs 30 Yr Fixed
Application activity increased despite a jump in interest rates. All rates reported by MBA from its Weekly Mortgage Application Survey were up on both a contract and effective basis from the previous week.
"When we consider the seemingly illogical behavior of rates and applications moving higher together, it's important to keep in mind that there were only really 2 days in the previous week with significantly lower rates than those seen last week," notes Mortgage News Daily's Matt Graham. "It's pretty normal for borrowers to get geared up for a mortgage while rates are falling, but to hold off on locking until it looks like the lows are in. That's exactly what last week gave us."
The contract interest rate for 30 year fixed-rate mortgages (FRM) with conforming balances of $417,000 or less moved from an average of 4.26 percent with 0.13 point to 4.34 percent with 0.16 point. The jumbo version of the 30-year FRM (balances above $417,000) had an average rate of 4.27 percent compared to 4.22 percent the previous week and points increased to 0.12 from 0.11.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.06 percent from 3.99 percent. Points increased to -0.03 from -0.46.
Rates for 15-year FRM averaged 3.43 percent with 0.22 point. The previous week the average was 3.39 percent with 0.07 point.
The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) increased to 3.18 percent from 3.11 percent, with points increasing to 0.35 from 0.05. ARMs continued to hold an 8 percent share of the application volume.
MBA's survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100 and interest rates are quoted for loans with an 80 percent loan-to-value ratio. Points include the origination fee.
