Interest rate volatility has had a large effect on the refinance component of the Mortgage Bankers Association (MBA) Market Composite Index (MCI) in recent weeks.

Two weeks ago, the Refinance Index increased 7.2%; last week it declined 7.2%. For the week ended Aug. 14, the index increased 6.9%.

The MCI gained 5.6% on a seasonally adjusted basis for the most recent period, after a drop of 3.5% for the week prior. On an unadjusted basis, the Index increased 4.8% compared with the previous week and increased 25.0% compared with the same week one year earlier. The MCI is calculated from the MBA's Weekly Mortgage Applications Survey.

MBA stopped disclosing index values with the July 31 data release. MBA noted the seasonally adjusted Purchase Index has been less sensitive to interest rate swings. It increased 3.9% from one week earlier, the third gain in the Purchase Index in a row and fourth in the past five weeks.

The share of refinancing applications increased to 53.3% of total applications, up from 52.3% the previous week. The adjustable-rate mortgage share of activity has been increasing as of late. At the end of last year, ARMs were just 0.9% of mortgage applications. In the most recent survey their share increased to 6.5% from 5.8% of total applications the previous week.

The average contract interest rate for 30-year fixed-rate mortgages fell to 5.15% from 5.38%, with points decreasing to 0.98 from 1.18 (including the origination fee) for loans with an 80% percent loan-to-value ratio, the association reported.

The average contract interest rate for 15-year FRMs declined by 19 basis points to 4.52%, while for one-year adjustable rate loans, it decreased by five basis points to 6.66%.

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