Mortgage applications increase as refinance volume rebounds

Strong growth in refinance volume following several weeks of so-so activity drove a 5.1% week-to-week increase in mortgage applications, according to the Mortgage Bankers Association.

The MBA's Weekly Mortgage Applications Survey for the week ending July 10 found that the refinance index increased 12% from the previous week and was 107% higher than the same week one year ago. Last week's results included an adjustment for the Fourth of July holiday.

The refinance share of mortgage activity increased to 64.2% of total applications from 60.1% the previous week.

"Mortgage rates continued their downward trend, with the 30-year fixed rate falling 7 basis points to 3.19% — another record low in MBA's survey and 63 basis points lower than the recent high in late March," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release. "The drop in rates led to a jump in refinance activity to the highest level in a month, with refinance loan balances also climbing to a high last seen in March."

The seasonally adjusted purchase index decreased 6% from one week earlier, while the unadjusted purchase index increased 5% compared with the previous week and was 16% higher than the same week one year ago.

This was the eighth consecutive week of year-over-year increases, Kan pointed out, adding, "Purchase activity remains relatively strong, despite the continued economic uncertainty and high unemployment caused by the ongoing pandemic."

Adjustable-rate mortgage activity decreased to 3% from 3.4% of total applications, while the share of Federal Housing Administration-insured loan applications increased to 11.1% from 10.9% the week prior.

The share of applications for Veterans Affairs-guaranteed loans increased to 11% from 10.4% and the U.S. Department of Agriculture/Rural Development share decreased to 0.6% from 0.7% the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased 7 basis points to 3.19%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400), the average contract rate increased 1 basis point to 3.53%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased 7 basis points to 3.24%. For 15-year fixed-rate mortgages, the average decreased 7 basis points to 2.7%. The average contract interest rate for 5/1 ARMs increased 2 basis points to 3%.