Mortgage application activity retreated again during the week ended July 12, although refinancing remained strong.  The Mortgage Bankers Association (MBA) said its Market Composite index, a measure of application volume, was down 1.1 percent on a seasonally adjusted basis from the previous week. That earlier week's data included an adjustment to account for the Independence Day holiday. The non-adjusted Composite Index rose 24 percent week-over-week, more than recovering from its 22 percent decline during the holiday period.

The Refinance Index gained 2 percent compared to the previous week and was 87 percent higher than the same week one year ago.  Precisely half of applications received were for refinancing, up from a 48.7 percent share during the week ended July 5.  

The seasonally adjusted Purchase Index lost 4 percent. The unadjusted version increased 21 percent compared with the previous week (when it lost 18 percent) and was 7 percent higher than the same week one year ago.


Refi Index vs 30yr Fixed



Purchase Index vs 30yr Fixed



"Mortgage rates increased across the board, with the 30-year fixed rate mortgage rising to its highest level in a month to 4.12 percent, which is still below this year's average of 4.45 percent," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Coming out of the July 4th holiday, applications were lower overall, with purchase activity slipping almost 4 percent. Refinance applications increased, with activity reaching its highest level in a month, driven mainly by FHA refinance applications. Historically, government refinance activity lags slightly in response to rate changes."

Added Kan, "Buyer interest at the start of the second half of the year continues to outpace year ago levels, with activity last week up 7 percent."  

The average loan size during the week was $323,400.  Mortgages for home purchasing averaged $323,900.  

The FHA share of total applications increased to 10.6 percent from 10.1 percent and the VA share declined to 12.9 percent from 13.2.  USDA applications accounted to an 0.6 percent share, down from 0.7 percent the prior week.  

As Kan said, interest rates rose for all mortgage products during the week, increasing on both a contract and an effective basis.  The average contract rate for 30-year fixed-rate mortgage (FRM) with origination balances at or below the conforming loan limit of $484,350 increased to 4.12 percent from 4.04 percent and points from 0.37 to 0.38. 

The average rate for jumbo 30-year FRM, loans with balances exceeding the conforming limit, rose 4 basis points to 4.07 percent.  Points dropped from 0.27 to 0.21.

Thirty-year FRM with FHA had a rate of 4.01 percent with 0.28 point.  The previous week the average was 3.97 percent with 0.30 point.

There was an average increase of 6 basis points in the contract rate for 15-year FRM, rising to 3.48 percent.  Points were unchanged at 0.32.

The rate for 5/1 adjustable rate mortgages (ARMs) increased to 3.58 percent from 3.56 percent the prior week while points dipped to 0.27 from 0.28.  The adjustable-rate mortgage (ARM) share of activity fell to 4.9 percent of total applications from 5.3 percent the prior week. The share of mortgage applications intended for ARMS has declined by 3 percentage points since early June.

MBA's Weekly Mortgage Applications Survey been conducted since 1990 and covers over 75 percent of all U.S. retail residential 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.