Modest Uptick in Refinancing After Modest Drop in Rates

Perhaps consumers viewed the recent retreat in rates as their last chancernto refinance before the Fed starts ratcheting up rates – maybe today, maybe inrnSeptember, but mortgage applications, especially for refinancing, increasedrnduring the week ended July 24.  </p

 The MortgagernBankers Association’s (MBA) said its Market Composite Index, a measure ofrnmortgage loan application volume, increased 0.8 percent on arnseasonally adjusted basis from the week ended July 17.  On an unadjusted basis, the Index increased 1 percent. </p

The Refinance Index rosern2 percent from the previous weekrnand refinancing as a share of all mortgage activity was 50.6 percent comparedrnto 50.3 percent the week before.  Purchasernmortgage applications did not benefit from the downturn in rates; the PurchasernIndex decreased 0.1 percent from one week earlier on a seasonally adjustedrnbasis.  On an unadjusted basis thernPurchase Index was 0.2 percent higher than the previous week and up 18 percent fromrnthe same week in 2015. </p

Refinance Index vs 30 Yr Fixed</p

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Purchase Index vs 30 Yr Fixed</p

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Applications for government-backedrnmortgages declined; the FHA share dipped from a 14.0 percent share to 13.7rnpercent and the VA share from 11.3 percent to 10.9 percent.  Applications for USDA mortgages werernunchanged at a 0.9 percent share.</p

Contract interest rates declined acrossrnthe board compared to the previous week with some rates reaching lows not seenrnsince May.  Effective rates retreated forrnall products with the exception of FHA backed loans.</p

The average contract interest rate forrn30-year fixed-rate mortgages (FRM) with conforming loan balances ($417,000 or less) decreasedrnto 4.17 percent, the lowest level since June 2015, from 4.23 percent.  Points were higher, 0.36 compared to 0.34. </p

The average contractrninterest rate for 30-yearrnFRM with jumbo loan balancesrnabove $417,000 decreased to 4.12 percent, the lowest level since May 2015, from 4.16 percent. rnPoints rose to 0.35 from 0.33  </p

Thirty-year FRM backed by the FHArndecreased to 3.98 percent,rnthe lowest levelrnsince June, with 0.26rnpoints.  The previous week the rate was 4.00 percent,rnwith 0.17 point.</p

Rates for 15-year fixed-rate mortgages averagedrn3.39 percent, the lowest level since June 2015, a decline of 4 basisrnpoints.  Points increased to 0.38 fromrn0.34</p

The adjustable-rate mortgage (ARM) sharernof activity decreased to 6.6 percent of total applications, the lowest share sincernmid-June.  The average contract interestrnrate for 5/1 ARMs was 3.04 percent with 0.37 point, down from 3.08 percent with 0.41 point.  </p

MBA’s Weekly Mortgage Application Surveyrnhas been conducted since 1990.  It covers over 75 percentrnof all U.S. retail residential mortgage applicationsrnwith respondents that include mortgage bankers,rncommercial banks and thrifts. Base period and value for all indexes isrnMarch 16, 1990=100 and interestrnrates are quoted assuming an 80 percent loan to value ratio and points thatrninclude the origination fee.

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