Mortgage application activity increased for the second week in a row, inching up thanks to elevated purchase demand.
The Mortgage Bankers Association's Market Composite Index, a measure of loan application volume based on surveys of the trade group's members, rose a seasonally adjusted 0.9% for the weekly period ending June 14. Borrowing activity decelerated, though, from
The lowest interest rates in over two months helped nudge volumes to a weekly gain. The conforming 30-year fixed rate among MBA lenders fell 8 basis points to 6.94% from 7.02%. Balances below the conforming amount make them eligible for sale to the government-sponsored enterprises.
Meanwhile, points used to help buy down the 30-year rate edged down to 0.61 from 0.65 for 80% loan-to-value ratio applications.
The downward rate trend came the same week as inflation data and the latest Federal Open Market Committee meeting
"Purchase applications increased a small amount for the week, led by applications for conventional loans," said Mike Fratantoni, MBA senior vice president and chief economist, in a press release.
Despite higher levels for purchases two weeks in a row, the number of applications declined 11.8% from a year ago, "but MBA is forecasting a pickup in home sales for the remainder of the year as more inventory is hitting the market," Fratantoni said.
Lenders and sellers would welcome the activity, but recent signs of
"Sales are sluggish because high home buying costs are making both house hunters and prospective sellers skittish," said Redfin senior economist Elijah de la Campa. "And with so few homes for sale, buyers in some markets are getting into bidding wars, which is helping push home prices to record highs."
The trends mean some
While purchase applications squeezed out a gain last week, the MBA's Refinance Index slipped 0.4%, coming off a 28.4% leap seven days earlier. But refinance application volumes were still 30% higher from a year ago, when a majority of homeowners held loans with interest rates below levels at the time.
The share of refinances relative to overall activity was unchanged at 35.2%. Adjustable-rate mortgages for purchases and refinances garnered 6% of all applications, dropping from 6.3% the previous week. Borrowers typically show less interest in ARMs when fixed rates fall..
While federally sponsored lending helped drive activity a week earlier, applications flattened in the latest survey. The seasonally adjusted Government Index ticked up 0.1%, while overall share declined.
Average mortgage rates dropped across all categories tracked by the MBA. The 30-year fixed-rate jumbo mortgage averaged 7.12%, dclining from 7.18% a week earlier. Points used for 80% LTV-ratio loans fell to 0.48 from 0.54.
The 30-year contract fixed rate for an FHA-backed mortgage averaged 6.79% compared to 6.87% in the previous survey. Points edged up to 0.93 from 0.92.
The average fixed rate for 15-year loans came in at 6.47%, 13 basis points below its previous mark of 6.6%. Borrowers used 0.6 worth of points compared to 0.55 seven days prior.
At the same time, the 5/1 adjustable-rate mortgage, which begins with a fixed 60-month term, took an 18 basis point fall from the previous survey period to 6.27% from 6.45%. Points came in at 0.96, rising from 0.81.