The Mortgage Bankers Association (MBA) reported a slight 2.1% decline in mortgage application activity as a slowing in refinances was partially offset by a rise in purchases. Aiding activity as well were new lows set in mortgage rates. Results were adjusted for the Fourth of July holiday.
For the week ending July 6, the Refi Index fell just 3% to around 4388 after declining 8% in each of the previous two reports. As a percent of total applications, refinancing share slipped 1% to 77%.
Meanwhile, the Purchase Index rose 3% to ~192 as record affordability encouraged homeownership. Earlier this week, Fannie Mae released its monthly National Housing Survey which showed increased optimism regarding housing, the economy and personal finances.
In particular, 73% of the respondents believe now is a good time to buy a home, which was up slightly. Potentially encouraging home purchases are expectations of higher rental prices and higher mortgage rates in the future. For example, nearly 50% expected that home rental prices will increase over the next 12 months with an average rise of 4%; 37% anticipated mortgage rates will rise over the next year. In the personal finance category, 18% reported that their household income was up significantly from a year ago.
The MBA's weekly survey also recorded new lows in mortgage rates for both 30-year fixed rate conforming and FHA loans. The average contract interest rate for 30-year conforming loans fell to 3.79% from 3.86%, while FHA rates dropped six basis points to 3.63%.