Applications for purchase mortgages gained for the seventh consecutive week to a level that was 18% higher than a year ago, further evidence that we’re headed into a strong summer home-buying season.
A seasonally adjusted index measuring purchase applications jumped 5% last week, according to a report from the Mortgage Bankers Association. Just as mortgage applications progressively increased, applications for refinancings simultaneously fell 9% from the prior week, though the level was still 137% higher than a year ago, MBA said.
“The pent-up demand from homebuyers returning to the market continues to support a recovery from the weekly declines observed earlier this spring,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.
However, there are still many households affected by the widespread job loss and current economic downturn. High unemployment and low housing supply may restrain a more meaningful rebound in purchase applications in the coming months, Kan said.
The Market Composite Index, a measure of mortgage loan application volume, decreased 3.9% on a seasonally adjusted basis from one week earlier.
After reaching a peak of 76% earlier this year, refinances now account for less than 60% of activity. The index hit its lowest level since February at 59.5% of total applications, according to the report.
Last week, the average U.S. rate for a 30-year fixed mortgage dropped to 3.37%, hitting another MBA survey-low.
Here is a more detailed breakdown of this week’s mortgage application data:
- The FHA’s share of mortgage apps remained unchanged from the week prior at 11.2%.
- The VA share of applications fell from 12.4% to 12.0%.
- The USDA share of total applications increased from 0.6% to 0.7%.
- Mortgage interest rates for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) fell to 3.37% from 3.42% the week before.
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) fell to 3.66% from 3.71%.
- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased from 3.41% to 3.46%.
- The average contract interest rate for 15-year fixed-rate mortgages decreased from 2.87% to 2.85%.
- The average contract interest rate for 5/1 ARMs decreased to 3.05% from 3.08%.