Housing
Mortgage Loan Rates Tumbled Last Week, So Did Loan Applications
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The Mortgage Bankers Association (MBA) released its report on mortgage applications Wednesday morning, noting a week-over-week decrease of 2.4% in the group’s seasonally adjusted composite index for the week ending June 10. Mortgage loan rates on all types of loans fell.
On an unadjusted basis, the composite index increased by 21% week over week. The seasonally adjusted purchase index increased by 5% compared with the week ended June 3. The unadjusted purchase index increased by 17% for the week and is now 16% higher year over year.
The MBA’s refinance index decreased by 1% week over week, and the percentage of all new applications that were seeking refinancing rose from 53.8% to 55.3%.
Adjustable rate mortgage loans accounted for 5.3% of all applications, up from 5% in the previous week.
In its Builder Application Survey that tracks application volume from mortgage subsidiaries of homebuilders across the United States, the MBA reported on Tuesday that applications fell 6% in May compared with April’s total. The group estimates new single-family home sales reached a seasonally adjusted annual rate (SAAR) of 488,000 units and that average loan size on a new home rose from $325,233 in April to $328,032 in May.
The May SAAR fell 3% compared with April, and on an unadjusted basis the MBA estimated that 47,000 new homes were sold in May, compared with 48,000 in April.
One last note: bond yields have dropped sharply in the run-up to the U.K. vote next week on whether the country should leave the European Union (Brexit). Low bond yields translate into lower mortgage interest rates, and the continued pressure on bonds is likely to push rates down even further this week.
According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage decreased from 3.83% to 3.79%, its lowest level since January 2015. The rate for a jumbo 30-year fixed-rate mortgage fell from 3.81% to 3.75%. The average interest rate for a 15-year fixed-rate mortgage decreased from 3.11% to 3.06%.
The contract interest rate for a 5/1 adjustable rate mortgage loan slipped from 2.96% to 2.87%. Rates on a 30-year FHA-backed fixed-rate loan decreased from 3.71% to 3.61%, the lowest level since May of 2013.
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