Mortgage application activity remained mixed in the week ending July 2.

The Mortgage Bankers Association (MBA) reported that the Refinance Index rose 9.2% to ~3945 as mortgage rates hit record lows. This is the highest level since mid-May 2009.

As a percent of total application activity, refinancing share increased to 78.7% from 76.8% the previous week. The MBA noted that this was the highest share since April 2009.

For the month of June, the Refinance Index averaged nearly 16% higher than May as 30-year mortgage rates declined 20 basis points from the end of May to the end of June to 4.58%.

Prepayment speeds are currently expected to increase around 5% in July, which is reported in August, from June. Partially offsetting this effect is a lower day count of 21 days in July compared with 22 in June. Meanwhile, the Purchase Index slipped 2% to 169.

"For the month of June, purchase applications declined almost 15% relative to the prior month, and were down more than 30% compared to April, the last month in which buyers were eligible for the tax credit," said Michael Fratantoni, MBA's vice president of research and economics.v

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