Total application volume down although purchases continue to rise
A decline in refinancings led to a drop in mortgage application volume last week, even though purchase activity continues to rise, according to the Mortgage Bankers Association.
The MBA's Weekly Mortgage Applications Survey for the week ending July 5 found that submitted applications was down by 2.4% as the refinance index decreased 7% from the previous week. This week's results include an adjustment for the Fourth of July holiday.
The refinance share of mortgage activity decreased to 48.7% of total applications from 51% the previous week. Still, refi activity was 88% higher than the same week one year ago.
"Mortgage applications were down slightly, even after adjusting for the July 4th holiday, as we saw opposing moves in purchase and refinance applications over the week. Purchase applications increased from the previous week and were up 5% from a year ago, a continuation of the strong annual growth that we saw in the first half of 2019. Refinance activity decreased over 6% and the refinance share of applications fell back below 50%, even as the 30-year, fixed-rate declined 3 basis points to 4.04%," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release.
"Borrowers have been less sensitive to low rates as many borrowers have either recently refinanced or are likely waiting for rates to fall even further. Other mortgage rates in our survey were unchanged or slightly higher than in the previous week."
The seasonally adjusted purchase index increased 2% from one week earlier, while the unadjusted purchase index decreased 18% compared with the previous week and was 6% higher than the same week one year ago.
Adjustable-rate mortgage activity increased to 5.3% from 5.2% of total applications, while the share of Federal Housing Administration-insured loan applications remained unchanged from 10.1% the week prior.
The share of applications for Veterans Affairs-guaranteed loans increased to 13.2% from 12.8% and the U.S. Department of Agriculture/Rural Development share increased to 0.7% from 0.6% the week prior.
The average contract interest rate for 30-year, fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased 3 basis points to 4.04%. For 30-year, fixed-rate mortgages with jumbo loan balances (greater than $484,350), the average contract rate increased 3 basis points to 4.03%.
The average contract interest rate for 30-year, fixed-rate mortgages backed by the FHA remained unchanged at 3.97%. For 15-year, fixed-rate mortgages, the average remained unchanged at 3.42%. The average contract interest rate for 5/1 ARMs increased to 3.56% from 3.46%.