The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting an increase of 1.5% in the group’s seasonally adjusted composite index for the week ending May 31. Mortgage interest rates decreased on all five types of loans the MBA tracks.
On an unadjusted basis, the MBA’s composite index fell by 10% in the past week. The seasonally adjusted purchase index decreased by 2% compared with the week ended May 24. The unadjusted purchase index dropped by 14% for the week and was 0.5% higher year over year. The weekly total includes an adjustment for the Memorial Day holiday.
Mortgage loan rates for a top-tier 30-year fixed-rate loan decreased from 4.05% to 3.94% last week, according to Mortgage News Daily. As of Tuesday night, top-tier borrowers were paying 3.89% for that loan. That’s the lowest level since late 2017. The yield on a 10-year U.S. Treasury note dropped last week from 2.27% to 2.12% as of last night’s close. A year ago, the 10-year note yielded 2.94%.
Mike Fratantoni, MBA’s senior vice-president and chief economist, said:
Mortgage rates dropped to their lowest level since the first week of 2018, driven by increasing concerns regarding the ongoing trade tensions with China and Mexico. Some borrowers, particularly those with larger loans, jumped at the opportunity to refinance, bringing the index and average refinance loan size to their highest levels since early April. Additionally, refinances for FHA and VA loans jumped by 11 percent.
The MBA’s refinance index increased by 6% week over week, and the percentage of all new applications that were seeking refinancing jumped from 39.7% to 42.2%.
Adjustable rate mortgage loans accounted for 7.1% 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 dropped from 4.33% to 4.23%. The rate for a jumbo 30-year fixed-rate mortgage fell from 4.18% to 4.09%. The average interest rate for a 15-year fixed-rate mortgage declined from 3.73% to 3.65%.
The contract interest rate for a 5/1 adjustable rate mortgage loan slipped from 3.74% to 3.62%. Rates on a 30-year FHA-backed fixed-rate loan fell from 4.33% to 4.24%.