• Refinancings plummet but purchases surge.

• Home buyers lock in low financing rates.

The Mortgage Bankers Association reported that its Mortgage Loan Application Index fell 2.6% (+64.0% y/y) last week following negligible increases during the prior two weeks.

A 6.3% decline (+160.3% y/y) in applications to refinance loans pulled the total lower. Purchase applications surged, however, by 6.4% (-1.5% y/y) as the economy began to open up after the coronavirus shutdowns. Interest rates have remained low throughout the period.

The refinancing share of mortgage activity fell to 64.3% of total applications, down from 76.2% early last month. Just 3.2% of total loans were adjustable-rate mortgages as a percent of total applications.

The effective interest rate on a 15-year fixed-rate mortgage eased to 2.95% last week from 2.99% in the previous week. This rate remained close to the all-time low (dating back to 1990). The effective interest rate on the 30-year fixed-rate mortgage edged two basis points lower to a near record low. It was down from a high of 3.93% in mid-March. The effective rate on a 30-year Jumbo mortgage edged down to 3.77% from a high of 3.95% in early-April. The rate on the 5-year adjustable rate mortgage dropped sharply to 3.17% from a high of 4.61% in October 2018.

The average mortgage loan size eased to $310,600 from $313,600. The average loan size of refinancings fell to $299,400 from an early-March high of $372,100. The average loan size for purchases declined w/w to $330,700.

Home buyers and owners continue to lock in currently low levels of interest rates. Applications for fixed-rate loans increased 77.4% y/y, while applications for adjustable rate loans fell 19.7% y/y.

The survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for each index is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver's SURVEYW database.

The minutes to the latest FOMC meeting are available here.