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Low rates, refi rebound push up mortgage-application activity

A weekly bounce back in refinance activity pushed mortgage applications to grow from one week earlier, according to the newest data from the Mortgage Bankers Association (MBA). 

The MBA's weekly mortgage application survey's market composite index, which measures loan-application volume, grew 2.4 percent on a seasonally adjusted basis for the week ending May 17. 

The upward movement was driven by the component refinance index, which climbed 8 percent week over week to its highest level in more than a month. The purchase index, although 7 percent higher year over year, fell 3 percent compared to the previous week.

"Mortgage rates fell for the fourth straight week, with the 30-year fixed-rate mortgage hitting its lowest level since January 2018, leading to a rebound in refinances,” said Joel Kan, the MBA's associate vice president of economic and industry forecasting.

The refinance share of mortgage activity rose to 40.5 percent of total applications, up from 37.9 percent the previous week. There also was an increase in the average refinance loan size, Kan said, with borrowers who carry large balances responding to the low rate environment.

Kan also indicated that economists are monitoring whether ongoing global trade tensions will have adverse ripple effects into the U.S. housing market.

“Some potential homebuyers may be delaying their home search until there's more certainty," he said.

The share of Federal Housing Administration loan applications dropped to 9.4 percent, down from 10.1 percent a week earlier. The share of U.S. Department of Veterans Affairs loan applications grew to 11 percent, up from 10.6 percent a week earlier. And the share of U.S. Department of Agriculture loan applications remained flat at 0.6 percent.

The average interest rate for 30-year fixed-rate mortgages (FRMs) retreated seven basis points to 4.33 percent, with average points going up to 0.43 (including the origination fee) for mortgages with an 80 percent loan-to-value ratio.

The average rate for 30-year jumbo FRMs was unchanged at 4.24 percent. The average rate for 30-year FHA FRMs increased two basis points to 4.34 percent.

The average rate for 15-year FRMs remained flat at 3.78 percent, while the average interest rate for 5/1 adjustable-rate mortgages fell 25 basis points to 3.57 percent.


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