Demand for purchase mortgages was up for the second time in three weeks despite an uptick in rates during the third week in May, according to a weekly survey by the Mortgage Bankers Association.
For the week ending May 21, applications to refinance were down 7 percent from the week before, and 9 percent from a year ago. Demand for purchase mortgages was up a seasonally adjusted 2 percent from the week before, but down slightly from a year ago.
Joel Kan
“Purchase applications increased for the second time in three weeks, rebounding after a rather weak April with mostly weekly declines,” said the MBA’s Joel Kan in a statement. “While purchase activity was around 4 percent lower than a year ago, the comparison is to last spring’s large upswing in activity as pandemic-related lockdowns lifted. Demand is robust throughout the country, but homebuyers continue to be held back by the lack of homes for sale and rapidly increasing home prices.”
There was a surge in pending home sales in May 2020, after many states lifted lockdowns imposed during the first wave of the pandemic in March 2020.
With rates on the rise, requests to refinance mortgages made up a slightly smaller share of mortgage applications, 61.4 percent, down from 63.3 percent the week before. But rates are still low enough that only 4 percent of applications were for adjustable-rate mortgage (ARM) loans.
The survey reported average rates for the following types of loans during the week ending May 21:
- For 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less), rates averaged 3.18 percent, up from 3.15 percent the week before. Points, including the origination fee, decreased to 0.35 from 0.36 for 80 percent loan-to-value loans. The effective rate increased from last week.
- For 30-year fixed-rate jumbo loans (balances greater than $548,250), rates decreased to 3.30 percent from 3.31 percent, with points increasing to 0.30 from 0.27 for 80 percent LTV loans. The effective rate was unchanged from last week.
- The average contract interest rate for 30-year fixed-rate FHA mortgages increased to 3.20 percent from 3.13 percent, with points
decreasing to 0.25 from 0.30 for 80 percent LTV loans. The effective rate increased from last week. - The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.53 percent from 2.54 percent, with points decreasing to 0.27 from 0.32 for 80 percent LTV loans. The effective rate decreased from last week.
- The average contract interest rate for 5/1 ARMs increased to 2.81 percent from 2.58 percent, with points increasing to 0.29 from 0.25 for 80 percent LTV loans. The effective rate increased from last week.
In their latest forecast, economists at Fannie Mae said they expect a gradual rise in rates over the next year and a half, with rates on 30-year fixed-rate mortgages averaging 3.5 percent by the final quarter of 2022.