Applications for refinancing continued to fall during the week ended July 19 and, according to the Mortgage Bankers Association (MBA) are now at the lowest level on its Refinance Index since July 2011. That index, a component of MBA's Market Composite Index which measures mortgage application volume, decreased 1 percent from the previous week, driven by a 12 percent drop in applications for government backed refinancing. Applications for conventional refinancing rose by 2.0 percent compared to the previous week. Refinancing retained the previous week's 63 percent share of all mortgage applications.

Refinance Index vs 30 Yr Fixed

The Composite Index itself was down 1.2 percent on a seasonally adjusted basis and 1 percent on an unadjusted basis from the week ended July 12. Both the seasonally adjusted and the unadjusted Purchase indices slipped 2 percent from the previous week but the unadjusted index was 6 percent higher than during the same week in 2012.

Purchase Index vs 30 Yr Fixed

Both contract and effective interest rates fell across the board from the previous week's levels. Thirty-year fixed-rate mortgages (FRM) with loan balances of $417,500 or less (i.e conventional loans) had an average contract rate of 4.58 percent with 0.40 point, down from 4.68 percent with 0.42 point. The average contract interest rate for the jumbo version of the loan (balances of more than $417,500) fell 15 basis points to 4.66 percent while points increased to 0.41 from 0.40.

FHA-backed 30-year FRM had an average contract rate of 4.28 percent with 0.33 point compared to 4.38 percent with 0.22 point the previous week.

The smallest decrease was in the average contract rate for 15-year FRM. That rate decreased to 3.63 percent from 3.70 percent, with points decreasing to 0.35 from 0.38.

The contract rate for 5/1 adjustable rate mortgages (ARMs) decreased to 3.30 percent from 3.39 percent,with points decreasing to 0.34 from 0.37. The ARM share of mortgage applications fell fractionally to 7 percent of total applications.

MBA's Weekly Mortgage Applications survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted since 1990 and includes responses from mortgage bankers, commercial banks and thrifts. Interest rate information is based on loans with an 80 percent loan-to-value ratio and points include the origination fee. Base period and value for all indexes is March 16, 1990=100.