Applications for refinancing reached the highest level in over three years last week despite weakness in the government backed sector of that business.   According to the Mortgage Bankers Association (MBA) the refinancing component of its Market Composite Index, a measure of mortgage loan application volume rose 0.8 percent from the previous week to a level last seen in April 2009.  However the government sector of refinancing fell 6 percent, muting what would have been a much more significant increase.  Non-government refinancing was up 2 percent.  Refinancing represented an 81 percent share of activity for the week, the highest share since late January.

The overall composite index increased 0.2 percent on both a seasonally adjusted basis and an unadjusted basis during the week ended July 27.  The seasonally adjusted Purchase Index decreased 2 percent from a week earlier and the unadjusted index was also lower than in the previous week.

Purchase Index vs 30 Yr Fixed

Refinance Index vs 30 Yr Fixed

Both contract and effective interest rates were up slightly during the week.  The rate for a 30-year fixed-rate mortgage (FRM) with a conforming loan balance of $417,500 or less was up one basis point to 3.75 percent with points increasing to 0.51 from 0.43.  The jumbo 30-year FRM (with a balance over $417,500) increased from 3.99 percent with 0.28 point to 4.01 percent with 0.32 point.  The rate for a conforming 15-year FRM was 3.09 percent with 0.49 point compared to 3.07 percent with 0.45 point  

FHA-backed 30-year FRM rates were unchanged from the previous week at 3.52 percent, remaining at the lowest contract rate in survey history.  Points increased from 0.52 to 0.55, raising the effective rate. 

The largest increase was in 5/1 hybrid adjustable rate mortgages (ARMs) which increased to 2.73 percent with 0.41 point from 2.68 percent with 0.35 point.  The ARM share of application activity decreased to 4.1 percent from the previous week.

Interest rate information is for mortgages with loan-to-value ratios of 80 percent and points include the application fee.

MBA's weekly Mortgage Application Survey covers 75 percent of all U.S. retail residential mortgage applications.  It covers mortgage bankers, commercial banks, and thrifts and has been conducted since 1990.  Base period and value for all indexes is March 16, 1990=100.