Seasonal inventory boosts homebuyer activity while refinance demand holds steady
Mortgage applications ticked up during the second week of May, driven by a solid increase in purchase activity, according to the latest data from the Mortgage Bankers Association (MBA).
MBA’s Weekly Mortgage Applications Survey showed a 1.1% increase in the Market Composite Index on a seasonally adjusted basis. On an unadjusted basis, total application volume rose 1% from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) inched up two basis points to 6.86% from 6.84%. MBA chief economist Mike Fratantoni noted that rates remained relatively stable following the Federal Open Market Committee’s (FOMC) recent meeting, which largely met market expectations.
While refinance activity dipped slightly, a notable rise in purchase applications supported the overall increase.
“The news for the week was the growth in purchase applications, up 2.3% and almost 18% higher than last year’s pace,” Fratantoni said. “Despite the economic uncertainty, the increase in home inventory means there are additional properties to buy, unlike the last two years, and this supply is supporting more transactions.”
The seasonally adjusted Purchase Index rose by 2%, while the unadjusted index also increased by 2% from the prior week and was up 18% compared to the same week in 2024. Government-backed purchase applications were especially strong, jumping nearly 5% for the week and 40% year over year.
Optimal Blue’s April Market Advantage report recorded a 7.5% increase in purchase locks, which helped drive a 3.2% monthly rise in total lock volume.
“April confirms the season is underway with a solid increase in purchase locks,” said Brennan O’Connell, director of data solutions at Optimal Blue. “We also saw a shift toward FHA loans, often used by first-time or credit-challenged buyers, and away from non-conforming products, possibly reflecting investor caution in response to broader economic uncertainty.”
In line with that shift, the FHA share of total mortgage applications increased to 17.4% from 16.4% the previous week. The VA share edged up to 13.4% from 13.3%, while the USDA share remained unchanged at 0.5%. The refinance share of total applications decreased to 36.4% from 37.1%, and adjustable-rate mortgage (ARM) applications fell to 7.4% of total activity.
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Refinance application activity, by contrast, showed a slight decline. The MBA’s Refinance Index decreased by 0.4% from the prior week, though it remained 44% higher than the same period last year.
Fannie Mae’s Refinance Application-Level Index (RALI) showed a 0.6% decrease in dollar volume week over week but reflected a 30.8% increase compared to the same time in 2024. RALI’s application count rose 0.8% for the week and is up 19.1% year over year.
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