Applications for both home purchase and refinancing increased during the week ended August 22.  The Mortgage Bankers Association said that its Market Composite Index, a measure of application volume, increased 2.8 percent from the previous week on a seasonally adjusted basis.  On an unadjusted basis the index rose 2.0 percent.

According to MBA's Weekly Mortgage Applications Survey conducted with representatives of mortgage bankers, commercial banks and thrifts, the seasonally adjusted Purchase Index based on applications for home purchase financing increased 3 percent from the previous week on a seasonally adjusted basis and was up 1 percent on an unadjusted basis from the previous week.  The Index was 11 percent lower than during the same week in 2013.  The unadjusted Purchase Index decreased 2 percent from the previous week and was 11 percent lower than during the same week in 2013.

Purchase Index vs 30 Yr Fixed

The Refinance Index also increased 3 percent compared to the previous week.  The share of all applications that were for refinancing increased from 55 percent the previous week to 56 percent, the highest level since last March. 

Refinance Index vs 30 Yr Fixed

Mortgage rates were decidedly mixed.  The average contract interest rate for 30-year fixed-rate mortgages (FRM) with conforming balances of $417,000 or less eased down one basis point to 4.28 percent with points also down one basis point to 0.25.  The effective interest rate was unchanged from the previous week.

The average contract rate for a jumbo 30-year FRM (balances higher than $417,000) increased from 4.18 percent with 0.23 point to 4.22 percent with 0.28 point.  The effective rate also increased.

FHA-backed 30-year FRM had an average interest rate of 3.98 percent, down from 3.99 percent and the lowest rate since June 2013.  Points increased to 0.13 from 0.03 and the effective rate rose.

The average rate for 15-year FRM was up 3 basis points to 3.47 percent.  Points increased to 0.34 from 0.30 and the effective rate also increased.

The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) remained unchanged at 3.10 percent, with points increasing to 0.52 from 0.44.  The effective rate increased from the previous week.  The ARM share of activity rose fractionally from 7.8 percent to 8 percent of total applications.

MBA's survey has been conducted since 1990 and covers over 75 percent of all U.S. retail residential mortgage applications.  Base period and value for all indexes is March 16, 1990=100.  Interest rates assume a mortgage with an 80 percent loan to value ratio and points include the origination fee.