A combination of economic and employment news last week that sent mortgage rates back to some lower rates we saw in April led to a bump in home purchase applications this week.
According to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association (MBA) for the week ending May 2, the Market Composite Index (a measure of mortgage loan application volume) increased 11.0% from the previous week’s 4.2% decrease. On an unadjusted basis, the Index decreased 12% compared with the previous week.
“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,” said Mike Fratantoni, MBA’s SVP and chief economist. “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 percent.”
This week’s MBA report showed the Refinance Index increased 11% from the previous week and was 51% higher than the same week one year ago. 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 refinance share of mortgage activity decreased to 37.1% of total applications from 37.3% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 8.3% of total applications.
Fratantoni noted an unexpected statistic this week in conventional mortgage applications, loans typically larger in size and more commonly available to move-up buyers.
“Conventional purchase application volume increased 13 percent and was up 9 percent from year-ago levels, a surprisingly strong move given lingering economic uncertainty. Government purchase loans were also up 6 percent for the week, led by a 9 percent growth in FHA purchase applications.”
Added Fratantoni, “With rates moving lower, refinance volume increased 11 percent, led by VA refinance applications, which were up 26 percent.”
To read the full report, click here.
