Mortgage application activity increased last week with both refinancing and purchase activity moving higher.
Contributing to the increase was improvement in mortgage rates. Freddie Mac reported a 10 basis point drop in the 30-year fixed rate to 5.32% in the week ending July 2. Application activity was also adjusted for the July Fourth holiday.
The Mortgage Bankers Association reported that the Refinance Index jumped 15.2% to a seasonally adjusted 1707.7, while the Purchase Index rose 6.7% to 285.6.
As a percent of total applications, refinancing share was 48.4%, up from 46.4% in the previous report. ARM share was also slightly higher at 4.4% from 4.3%.
Recent levels on the MBA's Refinance Index suggest a slowing in prepayment speeds in July and August.
Updated projections are forthcoming following release of the June prepayment reports, but speeds previously had been projected to decline in July by 10% in FNMAs and nearly double that in GNMAs as refinancing activity plunged in June on higher mortgage rates, while August had been projected at down nearly 30% from July in FNMAs, while GNMAs are seen around 10% lower.