Interest Rate Reprieve Drives Higher Volumes

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The dip in
mortgage rates reported by the Mortgage Bankers Association (MBA) for the week
ended June 1 was small compared to the 10-basis point decline reported by
Freddie Mac for the same period, but it did seem to spur increased mortgage activity.
 MBA said its Market Composite Index, a
measure of loan application volume, was up on a seasonally adjusted basis by 4.1
percent. The business week was shortened by the Memorial Day holiday, so data
also saw an adjustment to account for that event. Applications declined by 7.0
percent on a non-adjusted basis compared to the previous week. 

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

The Refinancing Index moved
higher
for the first time since mid-April, up 4.0 percent from the previous
week.  The share of applications that
were for refinancing ended a nine-week slide, rising to 35.6 percent from 35.3
percent the previous week.

The seasonally adjusted
Purchase Index was also 4 percent higher than during the week ended May 25, although
it dropped 8.0 percent before adjustment. 
The unadjusted Purchase Index was 9 percent higher than the same week
one year ago and has been higher on a year-over-year basis for 19 of the 22
weeks reported thus far in 2018.

The
FHA share
of total applications decreased to 9.7 percent from 9.9 percent while
the VA share of total applications rose to 10.1 percent from 9.9 percent. USDA
loan applications accounted for the same 0.8 percent distribution as during the
prior week.

There was a
roll-back in both contract and effective interest rates on all loan products tracked
by MBA. The average contract interest rate for 30-year fixed-rate mortgages
(FRM) with conforming loan balances of $453,100 or less declined to 4.75 percent
from 4.84 percent.  Points decreased to 0.46
from  0.47.  

The rate for jumbo
30-year FRMs
, those loans with balances exceeding $453,100, decreased by an
average of 3 basis points to 4.70 percent. Points ticked down to 0.35 from 0.36.

Thirty-year FRM
backed by the FHA had an average contract rate of 4.77 percent compared to 4.85
percent the prior week.  Points fell to 0.70
from 0.88.

There was a 3-basis
point drop in the average contract rate for 15-year FRM, to 4.21 percent.  Points dipped to 0.50 from 0.51.

The
average contract interest rate for 5/1 adjustable rate mortgages (ARMs) was
4.08 percent with 0.41 point.  The
previous week the rate was 4.11 percent with 0.62 point.  The ARM share of activity increased to 7.1
percent of total applications, the highest since early March, from 6.7 percent.

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.

 



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