Refinancing continued its slide during the week ended July 26 and mortgage application volume overall declined the Mortgage Bankers Association (MBA) said this morning. MBA reported that its Market Composite Index, a measure of application volume, was down 3.7 percent on a seasonally adjusted basis compared to the week ended July 19 and 4 percent on an unadjusted basis.

The Refinancing Index was down 4 percent but retained the previous week's 63 percent market share. Applications for the Home Affordable Refinance Program (HARP) increased to 37 percent of refinancing applications from 34 percent. The Purchase Index declined 3 percent on both a seasonally adjusted and an unadjusted basis and the seasonally adjusted Purchase Index was 5 percent higher than during the same week in 2012.

Purchase Index vs 30 Yr Fixed

Refinance Index vs 30 Yr Fixed

"Mortgage rates were little changed last week, but remain roughly one percentage point higher than they were three months ago," said Mike Fratantoni, MBA's Vice President of Research and Economics.  "Refinance application volume continues to decline, with the refinance index now more than 55 percent lower than its recent peak, reaching the lowest level in over two years. Applications for home purchases dropped for the fourth time in five weeks, but purchase volume is running about 5 percent higher than last year at this time."

As Fratantoni said, there was little movement in mortgage rates and the direction of those changes was mixed. The average contract interest rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances ($417,500 or less) was unchanged at 4.58 percent,with points decreasing to 0.38 from 0.40. The effective rate increased.

The contract interest rate for 30-year FRM with jumbo loan balances (greater than $417,500) decreased to 4.64 percent with 0.39 point from 4.66 percent,with 0.41 point. The effective rate decreased from last week.

The contract rate for FHA-backed 30-year FRM increased to 4.30 percent from 4.28 percent and points decreased to 0.31 from 0.33. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased 4 basis points to 3.67 percent with points increasing to 0.40 from 0.35. The effective rate increased from last week.

Adjustable rate mortgages (ARMs) had a 6 percent share of applications during the week, down from 7 percent the week before, The average contract interest rate for 5/1 ARMs increased to 3.39 percent from 3.30 percent,with points increasing to 0.36 from 0.34 and the effective rate increased.

All contract and effective rate quotes are based on loans with an 80 percent loan-to-value ratio. Points include the origination fee.

MBA's Weekly Application Survey from which the foregoing information is derived 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.