Mortgage applications increased 1.5 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending May 31, 2019. This week's results included an adjustment for the Memorial Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 1.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 10 percent compared with the previous week. The Refinance Index increased 6 percent from the previous week. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 14 percent compared with the previous week and was 0.5 percent higher than the same week one year ago.

"Mortgage rates dropped to their lowest level since the first week of 2018, driven by increasing concerns regarding the ongoing trade tensions with China and Mexico," said Mike Fratantoni, MBA Senior Vice President and Chief Economist. "Some borrowers, particularly those with larger loans, jumped at the opportunity to refinance, bringing the index and average refinance loan size to their highest levels since early April. Additionally, refinances for FHA and VA loans jumped by 11 percent."

Added Fratantoni, "Coming out of the Memorial Day holiday, and likely impacted by the financial market volatility caused by the trade tensions, purchase application volume declined for the week. Potential homebuyers may be more cautious given the heightened economic uncertainty."

The refinance share of mortgage activity increased to 42.2 percent of total applications from 39.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.1 percent of total applications.

The FHA share of total applications decreased to 9.5 percent from 9.6 percent the week prior. The VA share of total applications increased to 11.3 percent from 11.2 percent the week prior. The USDA share of total applications decreased to 0.6 percent from 0.7 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.23 percent from 4.33 percent, with points decreasing to 0.33 from 0.42 (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 $484,350) decreased to 4.09 percent from 4.18 percent, with points decreasing to 0.21 from 0.23 (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 decreased to 4.24 percent from 4.33 percent, with points decreasing to 0.33 from 0.43 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.65 percent from 3.73 percent, with points decreasing to 0.36 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 5/1 ARMs decreased to 3.62 percent from 3.74 percent, with points decreasing to 0.19 from 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.