Refis down 20% from year-ago levels as mortgage apps overall decline

The mortgage rates that are rising in tandem with a recovering economy dampened borrower activity, even with prime homebuying season underway.

The Mortgage Bankers Association’s Market Composite Index — a measure of loan application volume — dropped 5.1% from the week before on a seasonally adjusted basis. The seasonally adjusted refinance index fell 5.3% with the purchase index following at 4.6% week-over-week. Overall, refinances accounted for 60.3% of application activity, down from 60.6% the previous week.

Refinance applications declined for the fifth week in a row, dropping 30% over the last 10-week period and sitting 20.4% lower than year-ago levels. While purchase volume dipped in the near term, it was still 50.8% higher than the year before.

“The rapidly recovering economy and improving job market are generating sizeable home buying demand, but activity in recent weeks is constrained by quicker home price growth and extremely low inventory,” Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release.

The adjustable-rate mortgage share of activity rose again to 3.7% from 3.4% the week earlier.

By product type, Federal Housing Administration mortgages made up 10.2% of this week's applications, down from 11.3% week-over-week. Veterans Affairs loans jumped to 13.8% from 10.3% while the U.S. Department of Agriculture/Rural Housing Service share edged up to 0.5% from 0.4%.

The average contract interest rates rose across all loan types. The 30-year fixed-rate mortgages with conforming loan balances — $548,250 or less — went to 3.36% from 3.33%. Jumbo loans — those over $548,250 in value — went to 3.41% from 3.34% and FHA-insured mortgages went to 3.36% from 3.29%. The rate for 15-year FRMs increased to 2.74% from 2.71% and 5/1 ARMs went to 2.92% from 2.85%, with points rising to 0.46 from 0.4.