A decline in applications for home purchases nearly overwhelmed the gain made by refinancing activity during the week ended August 11.  The Mortgage Bankers Association reported that its Market Composite Index, a measure of application volume, managed to increase a meager 0.1 percent on a seasonally adjusted basis when compared to the previous week. The unadjusted index fell 1 percent.

The seasonally adjusted Purchase Index decreased 2 percent from one week earlier and the unadjusted Purchase Index was down 3 percent. The unadjusted index remained 10 percent higher than the same week in 2016.

Refinancing rallied yet again, with the Refinance Index rising 2 percent from the week ended August 4. In addition, the refinancing share of applications increased to 47.8 percent from 46.7 percent a week earlier. It was the largest share for refinancing since February.

The portion of applications that were for FHA mortgages and for USDA loans were unchanged from a week earlier at 10.2 percent and 0.8 percent respectively.  VA applications accounted for 10.5 percent of the total, down from 10.7 percent.

Interest rates for fixed-rate mortgages (FRM) continued their recent downward trend. The average contract interest rate for 30-year FRM with conforming loan balances ($424,100 or less) was at its lowest point since last November, 4.12 percent compared to 4.14 percent a week earlier. Points were unchanged at 0.38, and the effective rate decreased. 

Jumbo 30-year FRM, loans with balances greater than $424,100, had a contract rate averaging 4.04 percent, down 3 basis points week-over-week. Points rose to an average of 0.27 from 0.26, and the effective rate moved lower.

The average contract interest rate for 30-year FRM backed by the FHA decreased to 4.01 percent from 4.02 percent.  Points increased to 0.40 from 0.38 and the effective rate did not change.

The rate for 15-year FRM was unchanged at 3.41 percent, with points decreasing to 0.35 from 0.41. The effective rate decreased from the previous week.

The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) increased to 3.34 percent from 3.31 percent, and points rose to 0.29 from 0.21. The effective rate increased.  The ARM share of activity decreased to 6.6 percent of total applications from 6.8 percent the prior week.

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.