Mortgage applications rose 6.3% in the week ended May 5 as rates for all types of home loans drifted lower, the Mortgage Bankers Association said, citing its Weekly Mortgage Applications Survey.      

The average contract interest rate for conforming 30-year mortgages of $726,200 or less slid to 6.48% from 6.50% the week before, while the rate for 30-year fixed-rate mortgages backed by the FHA dipped to 6.41% from 6.43%.         

At the same time, MBA’s refinance index jumped 10% from the week before to its highest level since September 2022, as the refinance share of mortgage activity increased to 28% of mortgage applications from 27.2% in the preceding week.     

“Mortgage applications responded positively to a drop in rates last week, as the Fed signaled a potential pause at the current level for the federal funds rate in anticipation of inflation slowing and tightening financial conditions that will slow economic and job growth,” MBA Vice President and Deputy Chief Economist Joel Kan said in a news release. “Lower rates from week to week have helped buyers in the market, but limited for-sale inventory remains a challenge for many homebuyers.” 

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances of more than $726,200 decreased to 6.33% from 6.37%, and the average contract interest rate for a 15-year fixed-rate mortgage slid to 5.91% from 6.01%.