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Mortgage rates dropped into the low 4 percent/high 3 percent range last week and applications ticked up as a result, according to the Mortgage Bankers Association’s latest report.
Mortgage applications increased 7.1 percent last week from the previous week, according to data from the MBA’s Weekly Mortgage Applications Survey for the week ending June 2, 2017. The week’s results included an adjustment for the Memorial Day holiday.
The Market Composite Index, a measure of mortgage loan application volume, increased 7.1 percent on a seasonally adjusted basis from the week prior. On an unadjusted basis, the index decreased 15 percent compared with the previous week.
The dip in rates caused a bump in business, said Shant Banosian of Guaranteed Rate in Watertown.
Applications are up “because a lot of buyers got overwhelmed and intimidated by the spring market,” Banosian said. “They’re back now because inventory is creeping up and rates are down. Whenever you see rates cross a threshold like they did last week by dipping into the threes, there’s a big spike in activity.”
The Refinance Index increased 3 percent from the previous week. The seasonally adjusted Purchase Index increased 10 percent from one week earlier to its highest level since May 2010. The unadjusted Purchase Index decreased 14 percent compared with the previous week and was 6 percent higher than the same week one year ago.
The refinance share of mortgage activity decreased to 42.1 percent of total applications from 43.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.4 percent of total applications.
“This is purely rate-driven,” Banosian said. “People see rates dipping back down like they did across the board and if they can refinance, they will.”
The FHA share of total applications increased to 10.6 percent from 10.5 percent the week prior. The VA share of total applications increased to 11.1 percent from 10.8 percent the week prior. The USDA share of total applications remained unchanged at 0.8 percent from the week prior.
The average interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to its lowest level since November 2016, 4.14 percent, from 4.17 percent, with points increasing to 0.34 from 0.32 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
The average interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) decreased to its lowest level since November 2016, 4.08 percent, from 4.11 percent, with points decreasing to 0.21 from 0.30 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to its lowest level since December 2016, 4.01 percent, from 4.03 percent, with points increasing to 0.39 from 0.32 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average interest rate for 15-year fixed-rate mortgages decreased to its lowest level since November 2016, 3.39 percent, from 3.42 percent, with points increasing to 0.43 from 0.39 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 5/1 ARMs decreased to its lowest level since November 2016, 3.19 percent, from 3.22 percent, with points decreasing to 0.27 from 0.33 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
