Application Activity Recovers Despite Rising Mortgage Rates

After a string of dismal weeks during which refinancing activity dropped to its lowest level since November 2011, applications for both refinancing and purchasing picked up during the week ended June 7. The Mortgage Bankers Association said this morning that mortgage applications increased 5.0 percent on a seasonally adjusted basis.  On an unadjusted basis the Index was up 16 percent compared to the week ended May 31.

The Refinancing Index increased 5 percent, but despite that change the volume remained 11 percent below that of two weeks earlier and 36 percent below its recent peak in early May.  The refinancing share of all mortgage activity was at 69 percent compared to the previous week when it hit its lowest point (68 percent) since July 2011.  The share of refinance applications for the Home Affordable Refinance Program (HARP) fell from 32 percent the prior week to 29 percent.

The seasonally adjusted Purchase Index increased 5 percent from the previous week and the unadjusted index was up 14 percent.  The unadjusted index was 6 percent higher than during the same week in 2012.

Purchase Index vs 30 Yr Fixed


Purchase Index30 Yr. Fixed2009201020112012201345630 Yr. Fixed30 Yr. FixedSunday June 22 2008:Change: -2.74%


Refinance Index vs 30 Yr Fixed


Refinance Index30 Yr. Fixed2009201020112012201345630 Yr. Fixed30 Yr. FixedSunday May 15 2011:Change: -1.50%


The increase in mortgage applications came despite higher contract and effective mortgage interest rates for all products tracked by the survey.  MBA reports that the the average contract interest rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances ($417,500 or less) increased to 4.15 percent, the highest rate since March 2012, from 4.07 percent, with points increasing to 0.48 from 0.35.

The rate for 30-year FRM with jumbo loan balances (greater than $417,500) increased to 4.25 percent with 0.32 point, the highest rate since May 2012, from 4.20 percent with 0.28 point.  FHA-back 30-year FRM had an average rate of 3.81 percent, the highest rate since April 2012, up from 3.76 percent the previous week.  Points decreased to 0.26 from 0.32.  The average contract interest rate for 15-year FRM increased to 3.32 percent, the highest rate since April 2012, from 3.23 percent, with points remaining unchanged at 0.38.

After hovering around a 4 percent share of total mortgage applications for months, adjustable rate mortgage (ARM) applications have been increasing as interest rates have risen and last week hit a 7 percent market share.  The average contract interest rate for 5/1 ARMs increased to 2.78 percent, the highest rate since June 2012, from 2.76 percent, with points decreasing to 0.30 from 0.41.

The MBA survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.


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