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Mortgage application volume falls 8.8 percent in one week

Losing gains made in weeks prior, mortgage application volume fell substantially this week, led by a massive dip in refinance applications while new loans actually improved in this period.

mortgage

mortgage

All gains have been lost

In early May, mortgage application volume skyrocketed 7.0 percent, and the industry let out a small, cautious sigh of relief, but by the third week of the month, all gains were lost as applications dipped 9.8 percent in one week. Today, the Mortgage Bankers Association (MBA) reports that application volume fell another 8.8 percent compared to the week prior, further dashing the excitement felt early in the month.

The Market Composite Index dropped 8.8 percent on a seasonally adjusted basis from one week earlier and 9.0 percent on an unadjusted basis. The biggest losses were felt in the refinance sector, which dipped 12.0 percent, the largest single weekly decline of the year, pushing the refinance index to its lowest level since December 2012.

The bright spot: new loans

The seasonally adjusted Purchase Index actually increased 3.0 percent from one week earlier and was 14 percent higher than the same week one year ago.

“Refinance applications fell for the third straight week bringing the refinance index to its lowest level since December 2012 as mortgage rates increased to their highest level in a year,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “Rates rose in response to stronger economic data and an increasing chance that the Fed may soon begin to taper their asset purchases.”

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Average contract interest rates

According to the MBA:

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 3.90 percent, the highest rate since May 2012, from 3.78 percent, with points unchanged at 0.39 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) increased to 4.07 percent, the highest rate since August 2012, from 3.93 percent, with points decreasing to 0.27 from 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.62 percent, the highest rate since August 2012, from 3.53 percent, with points increasing to 0.27 from 0.13 (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 increased to 3.10 percent, the highest rate since August 2012, from 2.96 percent, with points decreasing to 0.30 from 0.32 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 5/1 ARMs remained unchanged at 2.60 percent, with points increasing to 0.24 from 0.23 (including the origination fee) for 80 percent LTV loans. The effective rate decreased 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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