What little life there was in mortgage volume last week came from refinancing.  That wasn't saying much.  The Mortgage Bankers Association's (MBA's) Market Composite Index, a measure of application volume, increased 3.6 percent on a seasonally adjusted basis during the week ended August 14 and 3 percent on an unadjusted basis.  The composite, after a couple of sharp and short-lived spikes earlier this year, essentially remains where it has been since early 2014.

The Refinance Index rose 7 percent from the previous week, returning to May levels.  Fifty-five percent of applications were for refinancing, the largest share since April although overall volume was significantly higher at that time.  The share during the week ended August 7 was 53.1 percent.

The increase in refinance applications was offset by fewer purchase applications, setting the seasonally adjusted Purchase Index back by 1 percent to its lowest level since March. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 19 percent higher than the same week one year ago.

Refinance Index vs 30 Yr Fixed

Purchase Index vs 30 Yr Fixed

"Concerns about the Chinese economy pushed interest rates down last week, resulting in a two basis point decline in thirty year fixed interest rate, bringing the rate down to its lowest since May 2015," said Lynn Fisher, MBA's Vice President of Research and Economics. "The pick-up in refinance activity was led by larger loan sizes on average, as continued investor interest drove jumbo interest rates down even further, by five basis points."

Applications for FHA loans had a 12.9 percent share compared to 13.3 percent the previous week and the VA share dipped to 11.1 percent from 11.3 percent.  The USDA share of total applications increased to 0.8 percent from 0.7 percent.

Both average contract and effective interest rates decreased during the week, with most reaching three-month lows.  The average contract interest rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances ($417,000 or less) decreased to 4.11 percent, the lowest rate since May, from 4.13 percent, with points increasing to 0.37 from 0.31.

Jumbo 30-year FRM (loan balances greater than $417,000) were also at the lowest levels since May.  The average contract interest rate was 4.03 percent, 5 basis points below the rate the previous week.  Points decreased to 0.29 from 0.34.

The average rate for 30-year FHA-backed FRM decreased to 3.88 percent, the lowest level since May 2015, from 3.94 percent.  Points decreased to 0.17 from 0.22.

The contract rate for 15-year FRM edged down 2 basis points to 3.37 percent.  Points decreased to 0.36 from 0.38.

The adjustable-rate mortgage (ARM) share of activity increased to 6.9 percent of applications after holding two weeks at 6.8 percent. Rates for 5/1 ARMs averaged 2.98 percent, the lowest since May, dropping from 3.11 percent a week earlier.  Points increased from 0.32 to 0.40.

The Weekly Mortgage Application Survey, which MBA has conducted since 1990, 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 data is based on loans with an 80 percent loan-to-value ratio.  Points include the origination fee.