Mortgage applications, refinance applications rebound

The index increased 12% on an unadjusted basis compared with the previous week.

The refinance index, which increased 11% from the previous week, was 51% higher than one year ago. The refinance share of mortgage activity decreased to 37.1% of total applications from 37.3% the previous week.

The seasonally adjusted purchase index increased 11% from one week earlier. The unadjusted purchase index increased 12% compared with the previous week and was 13% higher than the same week one year ago.

“The economic news last week included a negative reading for first-quarter GDP growth and further signs of contraction in the manufacturing sector, mixed with a solid employment report for April. The net impact on mortgage rates was mostly downward, but just back to levels from early April. The 30-year fixed rate declined to 6.84%,” said Mike Fratantoni, MBA’s SVP and chief economist. “Conventional purchase application volume increased 13% and was up 9% from year-ago levels, a surprisingly strong move given lingering economic uncertainty. Borrowers of conventional loans tend to have larger loan sizes and more apt to be move-up buyers. Government purchase loans were also up 6% for the week, led by a 9% growth in FHA purchase applications.”

Added Fratantoni, “With rates moving lower, refinance volume increased 11%, led by VA refinance applications, which were up 26%.”

The adjustable-rate mortgage (ARM) share of activity increased to 8.3% of total applications.

By product, the FHA share of total applications decreased slightly to 16.4% from 16.7% the week prior. The VA share of total applications increased to 13.3% from 13.1% the week prior, and the USDA share of total applications decreased to 0.5% from 0.6% the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 6.84% from 6.89%. Interest rates for 30-year fixed-rate mortgages with jumbo loan balances also decreased to 6.86% from 6.88%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.56% from 6.61%. The average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 6.17%.

Bucking the trend, the average contract interest rate for 5/1 ARMs increased to 5.97% from last week’s 5.89%.