In the week ending July 10, a major drop in mortgage rates helped demand for mortgage loans move up for the second week in a row.
The Market Composite Index ― a weekly survey of mortgage applications conducted for almost 20 years ― climbed 4.3% in the week ending July 10, according to the Mortgage Bankers Association on Wednesday.
The gain was led by a jump in refinance activity, which increased 17.7% in the week, accounting for 54.9% of all applications in the survey period.
Refinance-related loans were struggling to find demand in June after mortgage rates spiked in May, but last week the average rate for a 30-year loan dropped to just 5.05%, falling from 5.34% in the week before.
Yesterday, the New York Times reported that major profits in the nation’s big banks were attributable in part to the thriving mortgage industry.
“The refinancing rebound is providing a lift,” the report said. “As the Federal Reserve cut interest rates to record lows, hundreds of thousands of borrowers were able to take out cheaper loans. Lenders issued an estimated $1 trillion worth of mortgages during the first half of 2009, according to Inside Mortgage Finance.”
Meredith Whitney, the influential banking analyst, was quoted as saying, ““It’s the mother of all mortgage quarters.”
The MBA said its Purchase Index, however, decreased 9.4% in the week, pushing the 4-week average down to -0.2%.
The four week moving average for the seasonally adjusted Market Composite Index, remained unchanged this week.