Mortgage applications continued to increase, but at a slower pace even as mortgage rates set new record lows.
For the week ending Aug. 27, the Mortgage Bankers Association's (MBA) Refinance Index rose 2.8% to ~5084, its highest level since early May 2009 as the average contract interest rate for 30-year fixed-rate mortgages fell 12 basis points to 4.43%.
As a percent of total applications, refinancing share inched higher to 82.9% from 82.4% and is at its highest level since January 2009. While lender capacity constraints have reportedly eased a bit, they still remain constrained.
The MBA's Purchase Index, meanwhile, rose 1.8% to ~174. "Despite the slight increase in purchase activity in the past week, the continued low level of purchase applications indicates we are unlikely to see an increase in new home sales reported for August or existing home sales reported for September," said Michael Fratantoni, MBA vice president of research and economics.
For the month of August, the Refinance Index averaged 4675, up nearly 18% from July's average as mortgage rates averaged 13 basis points lower to 4.43%.
Speeds in the September prepayment report, which will be released in October, are currently projected to remain the same from September's projection. A factor that is partially offsetting an increase is a lower day count of 21 days versus 22 days in August.