Mortgage activity up as borrowers lock in lower rates
Mortgage applications saw a significant rise last week, spurred by falling interest rates, benefiting those seeking to refinance VA loans.
The volume of mortgage applications jumped 15.6% on a seasonally adjusted basis and surged 26% on an unadjusted basis, according to the Mortgage Bankers Association’s (MBA) weekly applications survey for the week ending June 7.
The average contract interest rate for 30-year fixed-rate mortgages dipped to 7.02%, down from 7.07% the week before.
“Mortgage rates were trending lower over the course of last week until a stronger than anticipated employment report resulted in a bounce back,” MBA chief economist Mike Fratantoni said in the report. “Lower rates earlier in the week meant a strong increase in refinance activity, particularly for VA borrowers, who jumped on the chance to lower their rates.”
The refinance index saw a notable increase of 28% from the prior week, also marking a 28% rise from the same week a year ago. Meanwhile, the seasonally adjusted purchase index climbed 9% from the previous week, with an unadjusted increase of 19%.
Fratantoni noted that improving inventory levels are providing more options for prospective homebuyers. "Multiple data sources are now indicating that home inventory levels, while still historically low, are up significantly from last year at this time. This is good news for many prospective homebuyers who have been frustrated by the lack of homes on the market."
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The refinance share of mortgage activity rose to 35.2% of total applications from 31.1% the previous week. The share of adjustable-rate mortgage (ARM) activity slightly decreased to 6.3% of total applications.
The FHA share of total applications marginally decreased to 13.1% from 13.2%, while the VA share increased significantly to 14.7% from 12.1% the previous week. The USDA share of total applications saw a modest increase to 0.4% from 0.3%.
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