Purchase activity has now increased for two straight weeks.
Prospective homebuyers aren’t deterred by the skyrocketing mortgage rates amid a slow start to the spring home-buying season this year. The Market Composite Index, a measure of loan application volume, rose 2 percent on a seasonally adjusted basis for the week ending May 6, from the previous week, according to the Mortgage Bankers Association.
Conventional, Federal Housing Administration (FHA) and Veterans Affairs (VA) purchase loan application volume led the gain in mortgage application volume even as mortgage rates rose to 5.53%, marking the highest since 2009, according to Joel Kan, MBA’s associate vice president of economic and industry forecasting.
“Despite a slow start to this year’s spring home buying season, prospective buyers
are showing some resiliency to higher rates. Purchase activity has now increased for two straight weeks,” Kan said in a statement.
The refinance share of mortgage activity dropped to 32.4% of total applications, from last week’s 33.9%.
“The rapid rise in mortgages rates continues to hit the refinance market, with activity 70
percent below a year ago. Most homeowners refinanced to lower rates in the past two years,” Kan added.
As mortgage rates surged, more borrowers continued to utilize adjustable-rate mortgages (ARMs). The ARM share of total applications rose to 10.8%, consisting of 19% of dollar volume, according to MBA.
The average contract interest rate for 30-year-fixed mortgages with conforming loan balances ($647,200 or less) rose to 5.53% this week from the previous week’s 5.36%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo-loan balances (greater than $647,200) increased to 5.08%, from 4.92% the prior week.
The FHA share of total applications fell to 10.5% from 11.1% in the week prior. The share of VA applications rose marginally to 10.5% from 10.3% The USDA share slightly went up to 0.5% from 0.4%.
The survey, conducted since 1990, covers more than 75% of the retail residential mortgage applications.