Mortgage rate decline juices refinances

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Mortgage rates have declined for their third straight week, giving a boost to homebuyers looking to refinance, according to new data provided by the Mortgage Bankers Association (MBA). 

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The MBA's weekly mortgage application survey, covering the week ending June 11, found that the market composite index, a measure of mortgage loan application volume, increased 4.2% compared to the prior week. The previous week’s results included an adjustment for the Memorial Day holiday. On an unadjusted basis, mortgage application volume increased 15% compared with the previous week.

Meanwhile, the MBA's refinance index jumped 6% from the previous week, but is still down 22% for the same week a year ago. The refinance share of mortgage activity increased to 61.7% of total applications, compared to 60.4% the previous week, and the adjustable-rate mortgage (ARM) share of activity decreased to 3.8% of total applications.

The uptick in refinancing was the result of the average 30-year fixed rate for mortgages with conforming loan balances of $548,250 or less falling for its third straight week to 3.11%, the lowest since early May, compared to 3.15% the previous week, with points increasing to 0.36 from 0.34, including the origination fee, for loans with a 20% down payment.

"U.S. Treasury yields have slid because of the uncertainty in the financial markets regarding inflation and how the Federal Reserve may act over the next few months," MBA’s Associate Vice President of Economic and Industry Forecasting Joel Kan said.

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The seasonally adjusted purchase index also saw a week-over-week increase of 2%, even as the supply of homes remains limited. Unadjusted, purchase applications increased 11% compared with the previous week, but were still down 17% for the same week a year ago. 

"An almost 5% increase in government purchase applications drove most of last week's gain while also tempering the recent growth in loan sizes," Kan added.

The survey MBAs covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990.

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