After eight consecutive weeks of decreases, mortgage applications increased by 4.1% last week as key interest rates dropped sharply, according to the Mortgage Bankers Association.

The MBA’s Weekly Mortgage Applications Survey for the week ending June 1 found that the refinance Index increased 4% from the previous week. This week’s results included an adjustment for the Memorial Day holiday. The refinance share of application activity increased to 35.6% from 35.3% the previous week.

“While the level of refi activity remains historically low, the reprieve in rate increases may have stopped the slide,” Joel Kan, the MBA’s associate vice president of economic and industry forecasting, said in a press release. “Purchase applications increased over the week and were 9% higher than the same week a year ago, a sign that despite tight housing inventory, purchase activity in 2018 remains stronger than in 2017.”

The seasonally adjusted purchase index increased 4% from one week earlier but on an unadjusted basis, it decreased 8%.

Adjustable-rate loan activity increased to 7.1% from 6.7% of total applications, while the share of Federal Housing Administration-guaranteed loans decreased to 9.7% from 9.9% the week prior.

The share of applications for Veterans Affairs-guaranteed loans increased to 10.1% from 9.9% and the U.S. Department of Agriculture/Rural Development share remained unchanged at 0.8% from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased 9 basis points to 4.75%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100), the average contract rate decreased 3 basis points to 4.7%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased 8 basis points to 4.77%. For 15-year fixed-rate mortgages the average rate decreased 3 basis points to 4.21%.

The average contract interest rate for 5/1 ARMs decreased 3 basis points to 4.08%.

SOURCE: National Mortgage News