Mortgage Loan Rates Ease, Applications for New Mortgages Rise

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The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting an increase of 4.1% in the group’s seasonally adjusted composite index for the week ending June 1. Mortgage loan rates fell last week on all five types of loans the MBA tracks.

By the end of last week, the political risks in Italy were largely mitigated when the coalition government was able to find a finance minister the government could agree on. That agreement soothed bond traders, reducing demand for safe haven investments, and pushed up the yield on bonds and, in turn, mortgage interest rates.

The good news is that the increases were modest and mortgage rates have moved little this week. According to Mortgage News Daily, Tuesday’s best 30-year fixed rate was 4.63%, up 0.03 percentage points from Friday’s best rate.

On an unadjusted basis, the MBA’s composite index decreased by 7% week over week. The seasonally adjusted purchase index rose by 4% compared with the week ended May 25. The unadjusted purchase index decreased by 8% for the week, and it is now 9% higher year over year.

The MBA’s refinance index increased by 4% week over week, and the percentage of all new applications that were seeking refinancing rose week over week from 35.3% to 35.6%.

Adjustable rate mortgage loans accounted for 7.1% of all applications, up from 6.7% in the prior week.

According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage decreased from 4.84% to 4.75%. The rate for a jumbo 30-year fixed-rate mortgage fell from 4.73% to 4.70%. The average interest rate for a 15-year fixed-rate mortgage dipped from 4.24% to 4.21%.

The contract interest rate for a 5/1 adjustable rate mortgage loan decreased from 4.11% to 4.08%. Rates on a 30-year FHA-backed fixed-rate loan fell from 4.85% to 4.77%.