Record-Low Interest Rates Spur Mortgage Applications in MBA Weekly Survey

Mortgage applications increased for the second straight week–and purchase applications increased for the ninth consecutive week–as key interest rates fell to record lows, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending June 12. 

The Market Composite Index increased by 8.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 7 percent compared to the previous week.

The unadjusted Refinance Index increased by 10 percent from the previous week and was 106 percent higher than the same week one year ago. The refinance share of mortgage activity increased to 63.2 percent of total applications from 61.3 percent the previous week.

The seasonally adjusted Purchase Index increased by 4 percent from one week earlier to its highest level in more than 11 years. The unadjusted Purchase Index increased by 2 percent compared to the previous week and was 21 percent higher than the same week one year ago.

“The housing market continues to experience the release of unrealized pent-up demand from earlier this spring, as well as a gradual improvement in consumer confidence,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Mortgage rates dropped to another record low in MBA’s survey, leading to a 10 percent surge in refinance applications. Refinancing continues to support households’ finances, as homeowners who refinance are able to gain savings on their monthly mortgage payments in a still-uncertain period of the economic recovery.”

The FHA share of total applications decreased to 11.0 percent from 11.5 percent the week prior. The VA share of total applications decreased to 11.5 percent from 12.3 percent the week prior. The USDA share of total applications increased to 0.7 percent from 0.6 percent the week prior.

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.30 percent from 3.38 percent, the lowest level in survey history, with points decreasing to 0.29 from 0.30 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) decreased to 3.67 percent from 3.70 percent, with points increasing to 0.28 from 0.26 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by FHA decreased to 3.33 percent from 3.38 percent, with points decreasing to 0.23 from 0.24 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.80 percent from 2.83 percent, with points increasing to 0.28 from 0.26 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 adjustable-rate mortgages increased to 3.07 percent from 3.02 percent, with points increasing to 0.29 from 0.27 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity decreased to 2.8 percent of total applications.

The survey covers more than 75 percent of all U.S. retail and consumer direct residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.