A dip in mortgage rates to the lowest levels since February helped boost applications for both purchase mortgages and refinancing last week, the Mortgage Bankers Association reports.
Purchase loan applications were up 13 percent from a year ago during the week ending May 7, and also posted a seasonally adjusted gain of 1 percent from the previous week.
Applications to refinance mortgages were up 3 percent from the previous week, reaching the highest level in eight weeks. Despite that, applications to refinance were down 12 percent from a year ago. Requests to refinance still accounted for 61.3 percent of all mortgage applications, up from 61 percent the week before.
“Most markets this spring continue to see robust demand” for purchase loans, said MBA economist Joel Kan. But “activity continues to be constrained by insufficient inventory levels, as well as homebuilder challenges related to the ongoing shortages and price increases for building materials.”
The MBA reported average rates for the following mortgage types:
- Rates on 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased to 3.11 percent, down from 3.18 percent the week before. Points, including the originations fee, decreased to 0.32 from 0.34 for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
- For 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) rates decreased to 3.27 percent, down from 3.31 percent the week before. Points increased to 0.34 from 0.27, but the effective rate was still down from the week before.
- Rates on 30-year fixed-rate mortgages backed by the FHA decreased to 3.07 percent, down from 3.13 percent the week before. Points increased to 0.34 from 0.22, but the effective rate still decreased from the week before.
- The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.49 percent, down from 2.54 percent the week before. Points decreasing to 0.29 from 0.31, and the effective rate decreased from the week before.
- Rates on 5/1 ARMs decreased to 2.57 percent, down from 2.76 percent the week before. With points decreasing to 0.22 from 0.23, the effective rate was also down from last week.
Interest in where mortgage rates are headed next is running high. A surprisingly bad jobs report last week could give the Federal Reserve justification to keep a tight lid on interest rates. But if employers are forced to raise wages too quickly, that could spark concerns about inflation that would worry bond investors, putting upward presssure on mortgage rates.
Email Matt Carter