Mortgage Applications in U.S. Dip in Late May

According to the Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ending May 29, 2020, U.S. mortgage applications decreased 3.9 percent from one week earlier.

The Market Composite Index, a measure of mortgage loan application volume, decreased 3.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 14 percent compared with the previous week.

The Refinance Index decreased 9 percent from the previous week and was 137 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 5 percent from one week earlier. The unadjusted Purchase Index decreased 7 percent compared with the previous week and was 18 percent higher than the same week one year ago.

"Purchase applications continued their recent ascent, increasing 5 percent last week and 18 percent compared to a year ago. The pent-up demand from homebuyers returning to the market continues to support a recovery from the weekly declines observed earlier this spring," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "However, there are still many households affected by the widespread job loss and current economic downturn. High unemployment and low housing supply may restrain a more meaningful rebound in purchase applications in the coming months."

Added Kan, "In contrast to the upswing in purchase activity, refinance applications fell for the seventh consecutive week - even as the 30-year fixed rate hit another MBA survey-low of 3.37 percent. After reaching a peak of 76 percent earlier this year, refinances now account for less than 60 percent of activity, and the index is now at its lowest level since February 21."

The refinance share of mortgage activity decreased to 59.5 percent of total applications from 62.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 3.5 percent of total applications.

The state-level data declined over the week, but the results were not adjusted to reflect impacts from seasonal factors or the Memorial Day holiday.

The FHA share of total applications remained unchanged from 11.2 percent the week prior. The VA share of total applications decreased to 12.0 percent from 12.4 percent the week prior. The USDA share of total applications increased to 0.7 percent from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.37 percent from 3.42 percent, with points decreasing to 0.30 from 0.33 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) decreased to 3.66 percent from 3.71 percent, with points increasing to 0.30 from 0.29 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.46 percent from 3.41 percent, with points decreasing to 0.23 from 0.30 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.85 percent from 2.87 percent, with points decreasing to 0.27 from 0.30 (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 3.05 percent from 3.08 percent, with points increasing to 0.25 from 0.01 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.