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With refinance activity rising to its highest level in three years, mortgage application volume increased 26.8% from one week earlier, according to the Mortgage Bankers Association.
The MBA’s Weekly Mortgage Applications Survey for the week ending June 7 found that the refinance index increased 47% from the previous period. The results for the week ending May 31 included an adjustment for the Memorial Day holiday.
The refinance share of mortgage activity increased to 49.8% of total applications from 42.2% the previous week.
“Mortgage rates for all loan types fell by a sizeable margin for the second straight week, pulled down by trade tensions with China and Mexico, the financial markets reacting to more bearish communication from several Fed officials, and weaker than expected hiring in May,” Joel Kan, the MBA’s associate vice president of economic and industry forecasting, said in a press release. “Despite the less positive outlook, both purchase and refinance applications surged, driven mainly by these lower rates. The refinance index jumped to its highest level since 2016.”
The seasonally adjusted purchase index increased 10% from one week earlier, but on an unadjusted basis, it increased 20% compared with the previous week.
“With the 30-year fixed-rate mortgage at its lowest level since September 2017, purchase activity was more than 10% higher than a year ago. Demand is still relatively strong, but there is likely some restraint from prospective buyers, driven by some economic uncertainty. Furthermore, housing supply is still very tight for first-time buyers,” Kan said.
Adjustable-rate loan activity increased to 7.9% from 7.1% of total applications, while the share of Federal Housing Administration-insured loan applications decreased to 8.9% from 9.5% the week prior.
The share of applications for Veterans Affairs-guaranteed loans decreased to 11% from 11.3% and the U.S. Department of Agriculture/Rural Development share remained unchanged from 0.6% the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased 11 basis points to 4.12%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350), the average contract rate decreased 5 basis points to 4.04%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.09% from 4.24%. For 15-year fixed-rate mortgages, the average decreased to 3.53% from 3.65%. The average contract interest rate for 5/1 ARMs decreased to 3.43% from 3.62%.
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