The volume of mortgage applications, which had risen by more than 6 percent the prior week lost nearly all those gains during the week ended May 12. The Mortgage Bankers Association said its Market Composite Index decreased 5.7 percent on a seasonally adjusted basis from one week earlier and 6 percent on an unadjusted basis. The Refinance Index decreased 8 percent from the previous week and was 43 percent lower than the same week one year ago. Refinancing applications accounted for 27.4 percent of the total compared to 28.0 percent the previous week. [refiappschart] The seasonally adjusted Purchase Index was 4.8 percent lower than the previous week and 5 percent lower on an unadjusted basis. Purchase applications were down 26 percent year-over-year. [purchaseappschart] “Mortgage rates increased last week even as Treasury yields were essentially flat, with the spread between the two rates widening to 310 basis points,” Joel Kan, MBA’s Vice President and Deputy Chief Economist said. “Mortgage application activity slowed, as most mortgage rates in the survey increased, with the 30-year fixed rate jumping nine basis points to its highest level in two months at 6.57 percent.” “Purchase applications decreased 5 percent to its slowest pace in a month, as buyers remain wary of this rate volatility, but also as for-sale inventory in many parts of the country remains scarce. Kan added, “Refinance applications accounted for 27 percent of all applications and dropped almost 8 percent last week. Most borrowers have lower rates on their mortgages, and those who are in the market are extremely rate sensitive. ”
