Mortgage applications increased 1.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 1, 2012.  This week’s results include an adjustment for the Memorial Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 1.3 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index decreased over 9 percent compared with the previous week.  The Refinance Index increased 2 percent from the previous week to its highest level since February 10, 2012.  The seasonally adjusted Purchase Index decreased slightly from one week earlier to its lowest level since April 13, 2012. The unadjusted Purchase Index decreased 13 percent compared with the previous week and was 3 percent lower than the same week one year ago.

The refinance share of mortgage activity increased to 78 percent of total applications from 77 percent the previous week.  This is the highest refinance share since February 24, 2012.  The adjustable-rate mortgage (ARM) share of activity remained at about 5 percent  of total applications.

In May 2012, among home purchase applications, 85 percent were for fixed-rate 30-year loans, 7 percent for 15-year fixed loans and 6 percent for ARMs.  The share of purchase applications for “other” fixed-rate mortgages with amortization schedules other than 15 and 30-year terms was 2 percent of all purchase applications. The number of home purchase applications with a 15-year fixed term is at its highest level of the year as a share of all home purchase applications, but the number of 15-year fixed refinance applications is at its second lowest level of the year as a share of all refinance applications.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 3.87 percent, the lowest rate in the history of the survey, from 3.91 percent, with points remaining unchanged at 0.46 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.  The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 4.13 percent, the lowest rate in the history of the survey, from 4.23 percent, with points decreasing to 0.35 from 0.40 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained unchanged at 3.70 percent, the lowest rate in the history of the survey, with points increasing to 0.60 from 0.59 (including the origination fee) for 80 percent LTV loans.  The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.20 percent, the lowest rate in the history of the survey, from 3.23 percent, with points increasing to 0.46 from 0.39 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs increased to 2.78 percent from 2.77 percent, with points increasing to 0.40 from 0.38 (including the origination fee) for 80 percent LTV loans.  The effective rate increased from last week.