Perhaps consumers viewed the recent retreat in rates as their last chance to refinance before the Fed starts ratcheting up rates - maybe today, maybe in September, but mortgage applications, especially for refinancing, increased during the week ended July 24.
The Mortgage Bankers Association's (MBA) said its Market Composite Index, a measure of mortgage loan application volume, increased 0.8 percent on a seasonally adjusted basis from the week ended July 17. On an unadjusted basis, the Index increased 1 percent.
The Refinance Index rose 2 percent from the previous week and refinancing as a share of all mortgage activity was 50.6 percent compared to 50.3 percent the week before. Purchase mortgage applications did not benefit from the downturn in rates; the Purchase Index decreased 0.1 percent from one week earlier on a seasonally adjusted basis. On an unadjusted basis the Purchase Index was 0.2 percent higher than the previous week and up 18 percent from the same week in 2015.
Refinance Index vs 30 Yr Fixed
Purchase Index vs 30 Yr Fixed
Applications for government-backed mortgages declined; the FHA share dipped from a 14.0 percent share to 13.7 percent and the VA share from 11.3 percent to 10.9 percent. Applications for USDA mortgages were unchanged at a 0.9 percent share.
Contract interest rates declined across the board compared to the previous week with some rates reaching lows not seen since May. Effective rates retreated for all products with the exception of FHA backed loans.
The average contract interest rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances ($417,000 or less) decreased to 4.17 percent, the lowest level since June 2015, from 4.23 percent. Points were higher, 0.36 compared to 0.34.
The average contract interest rate for 30-year FRM with jumbo loan balances above $417,000 decreased to 4.12 percent, the lowest level since May 2015, from 4.16 percent. Points rose to 0.35 from 0.33
Thirty-year FRM backed by the FHA decreased to 3.98 percent, the lowest level since June, with 0.26 points. The previous week the rate was 4.00 percent, with 0.17 point.
Rates for 15-year fixed-rate mortgages averaged 3.39 percent, the lowest level since June 2015, a decline of 4 basis points. Points increased to 0.38 from 0.34
The adjustable-rate mortgage (ARM) share of activity decreased to 6.6 percent of total applications, the lowest share since mid-June. The average contract interest rate for 5/1 ARMs was 3.04 percent with 0.37 point, down from 3.08 percent with 0.41 point.
MBA's Weekly Mortgage Application Survey has been conducted since 1990. It covers over 75 percent of all U.S. retail residential mortgage applications with respondents that include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100 and interest rates are quoted assuming an 80 percent loan to value ratio and points that include the origination fee.
