Conventional and government-backed loans post solid weekly gains
Mortgage applications surged last week as interest rates eased, offering some relief to borrowers against the backdrop of mixed economic signals.
Total mortgage application volume rose 11% for the week ending May 2, according to the Mortgage Bankers Association’s (MBA) latest weekly survey. On an unadjusted basis, application activity climbed 12% compared to the prior week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) slipped to 6.84% from 6.89%, reversing some of the previous month’s rate increases.
“The economic news last week included a negative reading for first-quarter GDP growth and further signs of contraction in the manufacturing sector, mixed with a solid employment report for April,” MBA chief economist Mike Fratantoni explained. “The net impact on mortgage rates was mostly downward but just back to levels from early April.”
Purchase activity also showed strength. MBA’s seasonally adjusted purchase index increased 11% from the prior week, while the unadjusted purchase index jumped 12% and was 13% higher compared to the same week a year ago.
“Conventional purchase application volume increased 13% and was up 9% from year-ago levels, a surprisingly strong move given lingering economic uncertainty,” Fratantoni said.
Purchase activity also showed notable strength. The seasonally adjusted Purchase Index increased 11% from the prior week, while the unadjusted Purchase Index jumped 12% and was 13% higher compared to the same week a year ago.
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Refinancing activity, which has been sluggish for much of the past year, saw renewed momentum. The refinance index rose 11% from the previous week and was 51% higher than the same week in 2024.
According to Fratantoni, “With rates moving lower, refinance volume increased 11%, led by VA refinance applications, which were up 26%.”
Fannie Mae’s weekly refinance application-level index (RALI) reported that the dollar volume of refinance applications grew by 6.7% week over week and was up 40.4% year over year. The number of refinance applications increased 4.7% compared to the prior week and was 25.7% higher than the same time last year.
Despite the growth in applications, the refinance share of total mortgage activity slipped slightly to 37.1% from 37.3% the week before. Adjustable-rate mortgages (ARMs) accounted for 8.3% of total applications, up from the previous week.
The share of applications backed by the Federal Housing Administration (FHA) decreased to 16.4% from 16.7%, while the share backed by the Department of Veterans Affairs (VA) rose to 13.3% from 13.1%. The US Department of Agriculture (USDA) share of applications ticked down to 0.5% from 0.6%.
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