Mortgage applications increase as 30-year rate falls

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Refis were up 5.5% over the prior week

After three straight weeks of declines, mortgage applications increased 4.2% for the week ending June 11, 2021, according to the latest report from the Mortgage Bankers Association.

Both purchase and refinance applications increased, with refinances notably up 5.5%, according to Joel Kan, the MBA’s vice president of economic and industry forecasting.

“The jump in refinances was the result of the 30-year fixed rate falling for the third straight week to 3.11%, which is the lowest since early May,” Kan said. “U.S. Treasury yields have slid because of the uncertainty in the financial markets regarding inflation, and how the Federal Reserve may act over the next few months.”

Purchase applications were also down 17% from a year ago, the start of the mortgage boom, Kan said.

“[This time last year] was when the mortgage market started seeing large post-shutdown increases in activity,” Kan said.

Loan quality lessons learned from 2020

Historically, when we see the market transition from a high refinance volume environment to one that’s more purchase-driven, defects in borrower qualification categories tend to increase as lenders attempt to capture every last bit of volume they can.

Presented by: ACES Quality Management

The refinance share of activity decreased to 61.7% of total mortgage applications from 60.4% the previous week. On an unadjusted basis, the market composite index increased 15% compared with the previous week. The seasonally adjusted purchase index increased 2% from one week earlier.

The FHA share of total mortgage applications increased to 9.6% from 9.5% the week prior, and the VA share of total mortgage applications increased to 11.5% from 11.2%.

Here is a more detailed breakdown of this week’s mortgage applications data:

    The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased to 3.11% from 3.15%The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) decreased to 3.20% from 3.29%The average contract interest rate for 30-year fixed-rate mortgages increased to 3.14% from 3.12%The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.49% from 2.52%The average contract interest rate for 5/1 ARMs increased to 2.69% from 2.54%, with points increasing to 0.38 from 0.29 (including the origination fee) for 80% LTV loans

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