Mortgage application volume was higher than the previous week as rising interest rates led more borrowers to refinance their loans.
The Mortgage Bankers Association's weekly index increased 1.6% on a seasonally adjusted basis for the period ending Aug. 1. A week earlier, loan applications were down 2.2%.
The refinance index was 4% higher week over week, the Washington-based trade group said on Wednesday, while the purchase index fell 1%. The refinance share of mortgage activity reached its highest level since March at 55% and adjustable-rate mortgages accounted for 8% of total applications.
Refinance activity was spurred by rising interest rates across all types of mortgages. For example, the average contract interest rate for a 30-year fixed mortgage was up two-basis points, to 4.35%. Jumbo loan interest rates increased four-basis points on a weekly basis, to 4.26%. The average rate for mortgages backed by the Federal Housing Administration was 4.06%, a three-basis point jump. Lastly, the average interest rate for a 15-year fixed mortgage rose four-basis points, to 3.51%.
"More Americans are realizing that they need to take advantage of the low rates before they start climbing," said Bill Banfield, vice president of Quicken Loans. "Even underwater homeowners can still refinance, as millions have yet to take advantage of the Home Affordable Refinance Program."
The MBA's weekly survey covers over 75% of all U.S. retail residential mortgage applications.