Mortgage applications increased 1.3 percent on a seasonally adjusted basis in May, according to the ""Mortgage Bankers Association's"":http://www.mbaa.org/default.htm latest ""mortgage application survey"":http://www.mbaa.org/NewsandMedia/PressCenter/80972.htm released Wednesday.[IMAGE]
The survey measured application data for the week ending June 1 and included an adjustment for the Memorial Day holiday.
On a non-seasonally adjusted basis, application rates were not as strong, falling more than 9 percent from the previous week.
Refinances continue to make up a large portion of mortgages, taking up 78 percent of activity for the week, up 1 percent from the previous week.
MBA's Refinance Index rose 2 percent for the week, while its Purchase Index fell 13 percent.
Over the month of May, applications rose 8.9 percent, but home purchase applications actually declined by 1.1 percent. The rise in applications was entirely driven by refinance applications.
""The small fall in mortgage applications for home purchase suggests that, despite record[COLUMN_BREAK]
low mortgage rates, the renewed weakness in the labor market is starting to weigh on demand,"" stated ""Capital Economics"":http://www.capitaleconomics.com/ property economist Paul Diggle Wednesday in response to the May data.
Diggle cites ""recent deterioration in labor market conditions and May's fall in consumer confidence"" as reasons for the fall in home purchase applications.
""We wouldn't be surprised if home purchase applications fell further in coming months,"" he added.
However, Diggle reports the new data is ""not worrying us too much,"" explaining that ""[m]ortgage-dependent buyers never looked like they would contribute much to the early stages of the housing recovery, which we continue to expect to be driven by buyers and investors attracted by favourable rental yields.""
Those applying for loans continue to favor fixed-rate 30-year loans, although 15-year fixed rate loans are becoming increasingly popular, reaching their highest level of the year in MBA's latest index.
Fifteen-year fixed-rate loans made up 7 percent of purchase applications for the week, while 30-year fixed-rate loans made up 85 percent.
Mortgage rates continue to wallow at all-time lows. The MBA reported the 30-year fixed rate loan interest rate for conforming loans fell to a new low of 3.87 percent.
Rates for 30-year fixed rate jumbo loans also fell to a new low: 4.13 percent, and the rate for 30-year fixed-rate FHA-backed mortgages remained at last week's all-time low of 3.7 percent.
Interest rates for 15-year fixed-rate loans fell to 3.2 percent, their lowest rate on record.
ARMs were the only loans to experience increased an interest rate for the week, rising to 2.78 percent from 2.77 percent over the week.