A 13% increase in refinance applications led to a 9.2% seasonally adjusted increase in overall application volume for the week ended May 11, according to the Mortgage Bankers Association.
As in the previous week, the activity was spurred by record low rates for all four categories of fixed-rate loans the trade group tracks.
The one thing that the rise in refi apps cannot be attributed to is the Home Affordable Refinance Program, said Michael Fratantoni, MBA's vice president of research and economics.
"A flare-up of the sovereign debt troubles in Europe once again led investors to flee to the safety of U.S. Treasury securities last week. As a result, mortgage rates have reached new lows in our survey, and refinancing application volumes picked up substantially as a result.
"Survey participants indicated that this was not due primarily to HARP volume—the HARP share of refinances fell to 28% of refinance applications, down relative to last week and last month, when the share was just above 30% in April. The increase in refinance activity last week was concentrated in the conventional sector, which was up around 14% for the week, while government refinance applications were up only 4%," Fratantoni explained.
The Purchase Index decreased 2.4% compared with the previous week and was 1% lower on an unadjusted basis than the same week one year ago.
The refi share of apps increased to 74.9% from 72.1% in last week's survey.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased by five basis points from the previous week to 3.96%. The average contract interest rate for 30-year Federal Housing Administration-insured loans declined by six basis points to 3.75%.
The rate for 30-year FRMs with jumbo loan balances fell by nine basis points to 4.2%. The average contract interest rate for 15-year FRMs declined three basis points to 3.26%.
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