After slipping for the second straight month in April, mortgage application activity lurched back up in May as both purchase loans and refinances showed improvement.
Using information reported weekly by the Mortgage Bankers Association (MBA), research firm Capital Economics calculated a 2.0 percent rise in application volumes throughout May, a reversal from April's 4.8 percent drop. The increase came despite a 3.1 percent decline in the month's final week, bringing activity to a six-week low.
In a note to clients, Ed Stansfield, chief property economist at Capital Economics, called the latest drop "disappointing," though he added "it is important to remember that the application data are very volatile, even after seasonal adjustment."
"[F]or now at least, the monthly average data are still just about edging upwards," Stansfield said. "And with the economic outlook still improving, we still expect mortgage applications to strengthen as the year progresses."
May application volumes were boosted by a 2.0 percent monthly increase in applications for home purchase, bringing total applications in that segment up a cumulative 9 percent over the past three months. At the same time, however, purchase applications remain down 17 percent compared to last year's levels.
Meanwhile, refinancing numbers rose 2.2 percent over the month, nudging up after a 10.8 percent decline in April. Refinances over the last 12 months have fallen off precipitously over the past year as mortgage interest rates started creeping up from last year's lows, but have seen a slight resurgence in recent weeks as rates have fallen to their lowest level in six months.