Even though mortgage application volume decreased from one week earlier, lenders had their best week for purchase business since the coronavirus shutdown began, according to the Mortgage Bankers Association.
The MBA's Weekly Mortgage Applications Survey for the week ending April 24 found a 3.3% drop in total volume, led by a 7% decrease in the refinance index
Still, refi application activity was 218% higher than the same week one year ago. The refinance share of mortgage activity decreased to 71.6% of total applications from 75.4% the previous week.
"The news in this week's release is that purchase applications, still recovering from a five-year low, increased 12% last week to the strongest level in almost a month. The 10 largest states had increases in purchase activity, which is potentially a sign of the start of an upturn in the pandemic-delayed spring home-buying season, as coronavirus lockdown restrictions slowly ease in various markets," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release. "California and Washington continued to show increases in purchase activity, with New York seeing a significant gain after declines in five of the last six weeks."
The seasonally adjusted purchase index increased 12% from one week earlier, while the unadjusted purchase index increased 13% compared with the previous week and was 20% lower than the same week one year ago.
"Contributing to the uptick in purchase applications was that mortgage rates fell to another record low in MBA's survey, with the 30-year fixed rate decreasing to 3.43%," Kan said. "However, refinance activity declined as rates for refinances likely remained higher than those for purchase loans. Lenders are still working through pipelines at capacity, and observed changes in credit availability for refinance loans have also in turn impacted rates."
Adjustable-rate mortgage activity increased to 2.9% from 2.8% of total applications, while the share of Federal Housing Administration-insured loan applications increased to 11.5% from 10.3% the week prior.
The share of applications for Veterans Affairs-guaranteed loans decreased to 13.3% from 13.8% and the U.S. Department of Agriculture/Rural Development share increased to 0.5% from 0.4% the week prior.
Meanwhile, the spread between conforming and jumbo mortgage rates narrowed last week. However, FHA rates bucked the general trend and increased, a sign of shifting lender risk tolerance.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased 2 basis points to 3.43%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400), the average contract rate decreased 9 basis points to 3.72%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased 6 basis points to 3.39%. For 15-year fixed-rate mortgages, the average decreased 5 basis points to 2.98%.The average contract interest rate for 5/1 ARMs remained unchanged at 3.29%.
