After several weeks of having little to no effect on application volume, record-low levels for mortgage interest rates are starting to drive consumers back to their originator to refinance their loan.
Total loan application volume increased 16.9% on a seasonally adjusted basis for the week ended July 13, according to the Mortgage Bankers Association. The calculation for the previous week had been adjusted to take into account the Independence Day holiday.
The Refinance Index increased 22% this week, while the refi share of apps rose to 80.1% from 77% in last week's survey.
The Purchase Index declined by a scant 0.1% on a seasonally adjusted basis but on an unadjusted basis rose by 25%. When compared with the same week in 2010, this index was down by 3% on an unadjusted basis.
Mike Fratantoni, MBA’s vice president of research and economics, said that the new lows for mortgage rates are a result of "growing concerns about the health of the U.S. economy. Applications for HARP refinance loans accounted for 24% of refinance activity last week, in line with the HARP share for the past few weeks.”
New low interest rates were established for the fixed-rate mortgages tracked in the survey. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) fell by five basis points from the previous week to 3.74%. The average contract interest rate for 30-year FHA-insured loans declined by eight basis points to 3.55%.
For the first time, the rate for 30-year FRMs with jumbo loan balances dropped below 4%, falling by seven basis points to 3.98%. The average contract interest rate for 15-year FRMs declined three basis points to 3.12%. The rate for the 5/1 ARM remained at its record-low point of 2.71%, the same as the previous week.
