Lower Mortgage Loan Rates Boost Refinancing Applications
The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting an increase of 2.4% in the group’s seasonally adjusted composite index for the week ending May 17. Mortgage interest rates decreased or stayed the same on four of five types of loans the MBA tracks.
On an unadjusted basis, the MBA’s composite index rose by 2% in the past week. The seasonally adjusted purchase index decreased by 2% compared with the week ended May 10. The unadjusted purchase index slipped by 3% for the week and was 7% higher year over year.
Mortgage loan rates for a top-tier 30-year fixed-rate loan decreased from 4.24% to 4.15% last week, according to Mortgage News Daily. As of Tuesday night, top-tier borrowers were paying 4.23% for that loan. The yield on a 10-year U.S. Treasury note inched up last week from 2.41% to 2.43% as of last night’s close. A year ago, the 10-year note yielded 3.06%.
Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting said:
Mortgage rates fell for the fourth straight week, with the 30-year fixed rate mortgage hitting its lowest level since January 2018, leading to a rebound in refinances. … We’re keeping a close eye on whether there may be some adverse effects of the ongoing global trade disputes on overall demand. Some potential homebuyers may be delaying their home search until there’s more certainty.
The MBA’s refinance index increased by 8% week over week, and the percentage of all new applications that were seeking refinancing rose from 37.9% to 40.5%.
Adjustable rate mortgage loans accounted for 6.8% of all applications, up 0.5 percentage points compared with the prior week.
According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage dipped from 4.40% to 4.33%. The rate for a jumbo 30-year fixed-rate mortgage remained unchanged at 4.24%. The average interest rate for a 15-year fixed-rate mortgage remained steady as well, at 3.78%.
The contract interest rate for a 5/1 adjustable rate mortgage loan fell from 3.82% to 3.57%. Rates on a 30-year FHA-backed fixed-rate loan increased slightly from 4.32% to 4.34%.