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Mortgage Apps Rise with Pickup in Refinances

refinanceA turnaround in refinance volume provided some lift to mortgage applications last week, but overall loan demand remains anemic.

In its Weekly Mortgage Applications Survey, the Mortgage Bankers Association (MBA) reported a 3.6 percent rise in application volumes for the week ending May 9. Taking out seasonal adjustments, applications were up 3 percent week-over-week.

In a significant turn from recent trends, refinances were entirely responsible for the bump in overall applications. According to MBA, the group’s Refinance Index climbed 7 percent last week, reaching its highest level since mid-April.

Still, refinance application numbers remain down nearly 80 percent compared to last year, according to Capital Economics, and the refinance share of total mortgage activity is only 50 percent, reflecting how much that segment has declined over the year as mortgage rates have increased.

Last week, MBA’s measure for the average contract interest rate on a 30-year fixed-rate mortgage was down to 4.39 percent, its lowest level since November last year. At the same time, points rose slightly to 0.22 (including the origination fee) for 80 percent loan-to-value ratio loans.

As refinances picked up, MBA’s Purchase Index dropped—albeit slightly—over the week. The index was down less than 1 percent both adjusted and unadjusted, ending the week 12 percent lower than the same time last year.

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