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Purchases Out Front of Drop in Mortgage Apps

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Despite the lowest long-term fixed rates in over a year, new applications for home loans moved down — with purchase financing activity leading the drop.

A seasonally adjusted 2 percent decrease from one week earlier was recorded for the Market Composite Index for the week that ended on June 10.

The index, which is a
measure of mortgage loan application volume, actually climbed 21 percent, however, from the week that included Memorial Day without any seasonal adjustments.

The Mortgage Bankers Association included the index as part of its Weekly Mortgage Applications Survey, which it says covers over 75 percent of all U.S. retail residential mortgage applications.

Applications for refinances slipped a percent on a seasonally adjusted basis from the week ended June 3, while refinance share
widened to 55.3 percent from 53.8 percent a week earlier and 48.5 percent a year earlier.

Purchase financing applications
retreated 5 percent for the week. But without any seasonal adjustments, purchase activity climbed 17 percent and was 16 percent higher on a year-over-year basis.

Applications for mortgages insured by the Federal Housing Administration represented 11.8 percent of all applications, thinning from 13.0 percent in the prior report and 14.2 percent in the year-earlier report.

The trade group reported that applications for loans guaranteed by the Department of Veterans Affairs made up 11.1 percent of overall volume, a more narrow share than 11.5 percent the previous week and the year-previous week.

Applications for adjustable-rate mortgages accounted for 5.3 percent of the latest total. ARM share widened from 5.0 percent the previous week
but was was thinner than 6.5 percent the same week the previous year.

MBA’s data indicate that interest rates on jumbo mortgages were 4 basis points lower than conforming rates. The jumbo-conforming spread widened from just a negative 2 BPS a week earlier and was unchanged from a year earlier.

MBA said that 30-year conforming fixed rates were at the lowest level since January 2015, while jumbo rates were the lowest they’ve been since last month.

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