The month of June began in similar fashion to the previous two months – with a double-digit jump in mortgage application volume. The week ending June 6 saw a 12.5 percent increase in the Market Composite Index, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey.
This figure factored in an adjustment for the Memorial Day holiday the week prior. On an unadjusted basis, the Index increased 23 percent from the previous week.
MBA Vice President and Deputy Chief Economist Joel Kan attributed the boost, in part, to recent shifts in Treasury rates.
“Coming out of the Memorial Day holiday, mortgage applications increased to the highest level in over a month, driven by growth in both purchase and refinance applications,” Kan said in a press release. “Treasury rates saw some movement during the week, which resulted in additional opportunities for borrowers. The rate for 15-year fixed-rate loans and Federal Housing Administration (FHA) loans saw declines last week, while the 30-year fixed rate was largely unchanged. Purchase applications were 20 percent ahead of last year’s pace, continuing to show strength compared to a year ago.”
With certain markets seeing a loosening in housing inventory, some homebuyers appear to be seizing the opportunity to make a move, despite ongoing concerns stemming from economic uncertainty, Kan added.
The 12.5 percent boost in application volume comes as welcome news following three straight weeks of declining application activity last month. MBA’s data on mortgage applications revealed a similar trend in April and May, when applications spiked by 20 percent and 11 percent, respectively, in the first weekly survey results for each month. In both instances, these initial jumps were followed by modest declines in subsequent weeks.
MBA economists have noted the correlation between application fluctuations and changes in mortgage rates, driven by economic uncertainty.
Several individual loan categories saw notable increases in application activity in the first week of June.
The Refinance Index jumped 16 percent from the previous week and was 28 percent higher than the same week one year prior, according to MBA. The seasonally adjusted Purchase Index rose 10 percent and was up 20 percent on an unadjusted basis compared with the previous week. This also put it 20 percent higher than the same week a year before.
Meanwhile, the refinance share of mortgage activity increased to 36.7 percent of total applications from 35.2 percent the week prior. The adjustable-rate mortgage (ARM) share of activity rose to 7.2 percent of total applications. The USDA share of total applications saw a modest increase to 0.6 percent from 0.5 percent the previous week.
Two loan categories experienced declines in application activity. The FHA share of total applications dropped to 18 percent from 18.7 percent the previous week and the Department of Veterans Affairs (VA) loan share dropped to 11.6 percent from 12.6 percent the week before.
The average contract interest rate for 30-year fixed-rate mortgages with either conforming or jumbo loan balances (those either less than or greater than $806,500) increased to 6.93 percent from 6.92 percent. Conforming loan balances saw effective rates increase and points increasing to 0.64 from 0.66 (including the origination fee) while jumbo balances saw a decrease in effective rates coupled with an increase in points to 0.63 from 0.60 for 80 percent LTV loans.
For 15-year fixed-rate mortgages, the average contract interest rate dropped to 6.16 percent from 6.25 percent, with points decreasing to 0.66 from 0.67 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from the previous week as well.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.60 percent from 6.68 percent, with points decreasing to 0.88 from 0.93 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from the week prior.
The average contract interest rate for 5/1 ARMs increased to 6.22 percent from 6.14 percent, with points decreasing to 0.33 from 0.43 (including the origination fee) for 80 percent LTV loans. The effective rate increased from the week before.