New Mortgage Loan Applications Soar on Lower Interest Rates
The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting an increase of 26.8% in the group’s seasonally adjusted composite index for the week ending June 7. Mortgage interest rates decreased on all five types of loans the MBA tracks.
On an unadjusted basis, the MBA’s composite index soared by 38% in the past week. The seasonally adjusted purchase index increased by 10% compared with the week ended May 31. The unadjusted purchase index jumped by 20% for the week and was 10% higher year over year. The prior week’s totals include an adjustment for the Memorial Day holiday.
Mortgage loan rates for a top-tier 30-year fixed-rate loan were unchanged at 3.94% last week, according to Mortgage News Daily. As of Tuesday night, top-tier borrowers were paying 3.98% for that loan. That’s the level in more than a week. The yield on a 10-year U.S. Treasury note inched higher last week from 2.12% to 2.14% as of last night’s close. A year ago, the 10-year note yielded 2.96%.
Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, said:
Mortgage rates for all loan types fell by a sizeable margin for the second straight week, pulled down by trade tensions with China and Mexico, the financial markets reacting to more bearish communication from several Fed officials, and weaker than expected hiring in May. Despite the less positive outlook, both purchase and refinance applications surged, driven mainly by these lower rates. … Demand is still relatively strong, but there is likely restraint from some prospective buyers, driven by some economic uncertainty. Furthermore, housing supply is still very tight for first-time buyers.
The MBA’s refinance index increased by a whopping 47% week over week, and the percentage of all new applications that were seeking refinancing jumped from 42.2% to 49.8%.
Adjustable rate mortgage loans accounted for 7.9% of all applications, up 0.8 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 4.23% to 4.12%. The rate for a jumbo 30-year fixed-rate mortgage slipped from 4.09% to 4.04%. The average interest rate for a 15-year fixed-rate mortgage fell from 3.65% to 3.53%.
The contract interest rate for a 5/1 adjustable rate mortgage loan declined from 3.62% to 3.43%. Rates on a 30-year FHA-backed fixed rate loan fell from 4.24% to 4.09%.