• Mortgage applications increased 9.3% in week ending June 5.

• 15-year fixed rate mortgage declines to seven-year low of 2.89%.

The Mortgage Bankers Association reported that its total Mortgage Applications Index rose 9.3% (48.1% year-on-year) during the week ending June 5. Applications to purchase a home increased 5.3% (12.0% y/y), while refinance activity jumped 11.4% (80.4% y/y), the first increase in eight weeks. Total mortgage applications are now down 33.1% from the 11-year high reached in early March; refinancing has fallen 45.0%, while purchase is just 0.6% from its late-January high.

The effective interest rate on a 15-year fixed-rate mortgage decreased to a seven-year low 2.89%. While Treasury rates have been flat-to-up since early April mortgage rates have continued to fall as risk premia -- the compensation for lending in riskier markets -- have declined. Thirty-year fixed rates were unchanged at their seven-year low of 3.46% while 30-year jumbo rates edged up to 3.77%, and remain above their early March lows. Five-year adjustable rates increased ticked down to 3.12%.

The average mortgage loan size declined to $318,800 (-11.0% y/y), down meaningfully from the early-March high of $367,900. For purchases the average loan size increased to $348,500 (5.7% y/y) while refinancing loans decreased to $300,100 (-22.4% y/y).

With fixed mortgage interest rates falling substantially more than adjustable rates, applications for fixed-rate loans are up 55.7% y/y while adjustable rate mortgages are down 40.8% 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 all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver's SURVEYW database.