Mortgage rates fell for the fourth time in five weeks amid economic worries
Mortgage applications decreased 2.3% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 27.
The Market Composite Index, a measure of mortgage loan application volume, posted that decline on a seasonally adjusted basis from one week earlier, with the Index decreasing 3% on an unadjusted basis compared with the previous week.
The Refinance Index decreased 5% from the week before and was 75% lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 1% from one week earlier. The unadjusted Purchase Index dropped 2% compared with the previous week and was 14% lower than the same week last year.
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“Mortgage rates fell for the fourth time in five weeks, as concerns of weaker economic growth and the recent stock market sell-off drove Treasury yields lower,” Joel Kan, MBA’s associate vice president of Economic and Industry Forecasting, said.
“Mortgage applications decreased to [their] lowest level since December 2018, as the purchase market continues to struggle with supply and affordability challenges. With the 30-year fixed rate at 5.33%, the refinance market continues to shrink, led by larger decreases last week for FHA and VA refinance applications. The refinance index was 75% below last year’s level, when rates were more than 200 basis points lower.”
Kan added that purchase applications last week were 14 percent lower than last year, with more activity in the larger loan sizes. “Demand is high at the upper end of the market, and supply and affordability challenges are not as detrimental to these borrowers as they are to first-time buyers,” he said.
The refinance share of mortgage activity decreased to 31.5% of total applications from 32.5% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 8.7% of total applications.
Read next: Mortgage applications post decreases across the board
The FHA share of total applications decreased to 10.8% from 11.3% the week prior, while the VA share of total applications decreased to 10.2% from 10.4% in the same period. The USDA share of total applications remained unchanged at 0.5% from the week before.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 5.33% from 5.46%, with points decreasing to 0.51 from 0.60 (including the origination fee) for 80% 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 $647,200) decreased to 4.93% from 5.02%, with points remaining unchanged at 0.41 (including the origination fee) for 80% LTV loans. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 5.2% from 5.3%, with points decreasing to 0.69 from 0.82 (including the origination fee) for 80% LTV loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.59% from 4.72%, with points decreasing to 0.63 from 0.70 (including the origination fee) for 80% LTV loans. The average contract interest rate for 5/1 ARMs decreased to 4.46% from 4.49% , with points decreasing to 0.68 from 0.76 (including the origination fee) for 80 percent LTV loans. All effective rates decreased from last week.
