Mortgage application activity rose 1.1% in the week ending May 20 even as mortgage rates eased back from their recent lows. 

According to the Mortgage Bankers Association (MBA), the Refinance Index increased 0.9% to ~2591 — its highest level since mid-December, while the Purchase Index was up 1.5% to ~190. 

The limited increase was related to a pickup in mortgage rates with the 30-year fixed rate contract rising nine basis points to 4.69%.

As a percent of total applications, refinancing share was little changed at 66.8% versus 66.7% in the previous week.  The share was at its highest level since the end of last January. Meanwhile, ARM share fell to 5.8% from 6.3%.

A significant response in refinance activity is not expected unless mortgage rates drop through 4.5% which would start to bring in some of the 4.5% coupon.

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