Loan application volume increased 0.4% from one week earlier, according to the Mortgage Bankers Association, as rates fell to their lowest level in three weeks.

The MBA's Weekly Mortgage Applications Survey for the period ending July 21 found that the refinance Index increased 3% from the previous week.

The seasonally adjusted purchase index decreased 2% from one week earlier. On an unadjusted basis, the purchase index decreased 2% compared with the previous week and was 8% higher than the same week one year ago.

The refinance application share increased to 46% from 44.7% the previous week.

Adjustable-rate loan application activity increased to 6.8% from 6.7%, while the share of applications for Federal Housing Administration-insured mortgages decreased to 10.2% from 10.7%.

The Veterans Affairs application share decreased to 10.5% from 10.7% and the U.S. Department of Agriculture share increased to 0.8% from 0.7%.

This week's decline in rates for the 30-year conforming mortgage partially reverses a 9-basis-point spike that took place in late June and early July.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased 5 basis points to 4.17%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100), the average contract rate decreased 12 basis points to 4.06%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased 5 basis points to 4.05%, while for 15-year fixed-rate mortgages, the average decreased 3 basis points to 3.45%.

The average contract interest rate for 5/1 ARMs decreased to 3.29% from 3.32%.

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