Refinancing Activity Continues to Shrink as Rates Jump to Recent Highs

was another substantial drop in mortgage applications during the week
ended May 31 as rates increased, in some cases to 13 month highs.
The Mortgage Bankers Association (MBA) said results of its Weekly
Mortgage Applications Survey showed an 11.5 percent decrease in its
Market Composite Index, a measure of mortgage volume, on a seasonally
adjusted basis from the week ended May 24. The Composite was down 20
percent on a non seasonally adjusted basis.

Refinance Index decreased 15 percent from the previous week and is at
its lowest level since the end of November 2011.  The
refinancing share of mortgage applications dropped from 71 percent
the previous week to 68 percent, the smallest share since early July
2011 and the fourth straight week it has declined. Refinancing
through the Home Affordable Refinancing Program (HARP) held its
ground with a 32 percent share of refinancing – a percentage that
has not changed for three weeks.

seasonally adjusted Purchase Index decreased 2 percent from one week
earlier. The unadjusted Purchase Index was down 13 percent compared
with the previous week and was 14 percent higher than the same week
one year ago.

for the conforming 30-year fixed-rate mortgage (FRM) had the biggest
single-week increase since July 2011
, jumping from 3.90 percent to
4.07 percent, the highest rate since April 2012. Points decreased to
0.35 from 0.39.

average rate for 30-year jumbo FRMs (loan balances greater than
$417,500) increased by 13 basis points to 4.20 percent, the highest
rate since May 2012. Points increased to 0.28 from 0.27.

30-year FRMs also increased to the highest level since May 2012, 3.76
percent, from 3.62 percent the previous week. Points increased to
0.32 from 0.27.  
The rate for 15-year
FRMs reached the highest level since June 2012, increasing to 3.23
percent with 0.38 point from 3.10 percent with 0.30 point.

average contract interest rate for 5/1 adjustable rate mortgages
(ARMs) increased to 2.76 percent, the highest rate since June 2012,
from 2.60 percent,

points increasing to 0.41 from 0.24. The share of ARM activity
increased to 6 percent of total applications.

quoted are for loans with an 80 percent loan-to-value ratio and
points include the origination fee. The effective mortgage rate also
increased for all of the loan types listed above.

survey covers over 75 percent of all U.S. retail residential mortgage
applications, and has been conducted weekly since 1990. 
Respondents include mortgage bankers, commercial banks and thrifts. 
Base period and value for all indexes is March 16, 1990=100.

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