The drop in interest rates during the week ended July 3 sent mortgage application volume higher on a seasonally adjusted basis but the shortened week occasioned by the Independence Day holiday meant that unadjusted volume was down appreciably.

Total application volume as measured by the Mortgage Bankers Association's (MBA's) seasonally adjusted Market Composite Index was up by 4.6 percent compared to the week ended June 26.  The data included an additional adjustment to account for the holiday.  When unadjusted, however, the volume fell by 6 percent. 

The Refinance Index, which is not adjusted, increased 3 percent from the previous week but the share of all applications that were for refinancing dropped to 48.0 percent from 48.9 percent.  It was the lowest market share for refinancing since June 2009.

The seasonally adjusted Purchase Index increased 7 percent from the previous week but was down 4 percent unadjusted.  The unadjusted index was 32 percent higher than during the same week in 2014.

Refinance Index vs 30 Yr Fixed

Purchase Index vs 30 Yr Fixed

FHA loans constituted 13.7 percent of all applications, down from 14.0 percent the prior week and VA loans were unchanged at 10.8 percent.  USDA loans dipped to a 0.9 percent share from 1.0 percent a week earlier.

Mortgage interest rates, both contract and effective, decreased for all loan products tracked by the MBA's Weekly Mortgage Application Survey.  The average contract interest rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances ($417,000 or less) decreased to 4.23 percent from 4.26 percent the week before.  Points increased to 0.37 from 0.33.

Thirty-year jumbo FRM (with opening balances greater than $417,000) carried an average contract interest rate of 4.18 percent, down from 4.21 percent.  Points decreased to 0.30 from 0.38.  

The rate for 30-year FRM backed by the FHA decreased to 4.01 percent from 4.04 percent.  Points were unchanged at 0.18.

The average contract interest rate for 15-year FRM decreased three basis points to 3.41 percent.  Points were unchanged at 0.31.

The share of adjustable rate mortgage (ARM) applications increased from a 7.0 to a 7.1 percent share.  The average contract interest rate for 5/1 ARMs was 3.03 percent compared to 3.09 percent the week before and points declined to 0.37 from 0.45.

MBA's survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100 and interest rate information presumes a loan with an 80 percent loan-to-value ratio and points that include the origination fee.