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Housing News

Mortgage application volume propped up by refinances

On an unadjusted basis, purchase activity fell 13 percent for the week, but on an adjusted basis, fell only slightly, leaving refinances to continue propping up the application volume.

No major spikes in 2012

Although we have seen some single digit increases and decreases in the volume of mortgage applications this year, no week has produced a shocking increase or decrease, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. For the week ending in June 1st, applications increased 1.3 percent from the week prior, including adjustments for the Memorial Day holiday. The Refinance Index rose 2.0 percent for the week as the Purchase Index fell “slightly” for the week.

The refinance share of mortgage activity increased to 78 percent of total applications from 77 percent the previous week, hitting the highest refinance share since February 24, 2012. The adjustable-rate mortgage (ARM) share of activity remained at roughly 5.0 percent of total applications.

In May 2012, among home purchase applications, 85 percent were for fixed-rate 30-year loans, 7.0 percent for 15-year fixed loans and 6.0 percent for ARMs. The share of purchase applications for “other” fixed-rate mortgages with amortization schedules other than 15 and 30-year terms was 2 percent of all purchase applications. The number of home purchase applications with a 15-year fixed term is at its highest level of the year as a share of all home purchase applications, but the number of 15-year fixed refinance applications is at its second lowest level of the year as a share of all refinance applications.

Mortgage rate trends

According to the MBA:

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  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 3.87 percent, the lowest rate in the history of the survey, from 3.91 percent, with points remaining unchanged at 0.46 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 4.13 percent, the lowest rate in the history of the survey, from 4.23 percent, with points decreasing to 0.35 from 0.40 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained unchanged at 3.70 percent, the lowest rate in the history of the survey, with points increasing to 0.60 from 0.59 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.20 percent, the lowest rate in the history of the survey, from 3.23 percent, with points increasing to 0.46 from 0.39 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 5/1 ARMs increased to 2.78 percent from 2.77 percent, with points increasing to 0.40 from 0.38 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

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