Another week of declining interest rates boosted refinance activity and sent overall mortgage activity higher during the week ended July 9.  The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage application volume, rose 2.8 percent on a seasonally adjusted basis from the week ended June 2.  On a non-adjusted basis, there was a 27 percent increase in the Index. The previous week's Memorial Day holiday and MBA's adjustments to account for it distorted the current week's non-adjusted figures

The Refinance Index increased 9 percent, reaching its highest level since last November.  The refinance share of activity jumped to 45.2 percent of applications received from 42.1 percent a week earlier. The average size of loans for refinancing was the highest since last September, $274,700.

Purchasing did not keep pace with refinancing; the seasonally adjusted Purchase Index declined by 3 percent. The unadjusted Purchase Index increased 19 percent compared with the previous week and was 8 percent higher than the same week in 2016.

Refi Index vs 30yr Fixed

Purchase Index vs 30yr Fixed

Applications for FHA-backed loans made up 11.2 percent of all applications received, up from 10.6 percent a week earlier. The VA and the USDA shares were unchanged from the previous week at 11.1 percent and 0.8 percent respectively.

Fixed rates inched down slightly; all contract rates were lower than the previous week. Effective rates declined for all but the conforming 30-year fixed-rate mortgage (FRM) which was unchanged from a week earlier. The contract rate for those mortgages, which have a loan limit of $424,100, decreased to 4.13 percent from 4.14 percent.  Points increased to 0.35 from 0.34.

The average contract rate for jumbo 30-year FRM (loan balances higher than the conforming limit) decreased to 4.06 percent from 4.08 percent. Points rose to 0.24 from 0.21.  

FHA-backed 30-year FRM had an average contract rate of 4.00 percent with 0.29 point.  The previous week the rate was 4.01 percent with 0.39 point.

The average contract rate for 15-year FRM was 3.37 percent, down 2 basis points from the prior week.  Points declined to 0.34 from 0.43.

Adjustable rate mortgages (ARMs) had a market share of 7.4 percent, the same as the previous week.  The contract rate for 5/1 ARMs increased to 3.26 percent from 3.19 percent, with points decreasing to 0.20 from 0.27. The effective rate was also higher.

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