Mortgage application volume increased 5.7% on an adjusted basis during the week ended July 23, driven by a surge in refinance activity, according to he Mortgage Bankers Association’s (MBA) Weekly Applications Survey.
Applications for refinances increased 9% compared with the previous week while applications for purchases decreased 2%.
Year over year, applications for refinances were down 9% and applications for purchases were down 18%.
The surge in refinance activity was due to falling rates: During the week, the average rate for a 30-year, fixed-rate mortgage dropped ten basis points to 3.01%. That’s down from 3.11% the previous week.
On an unadjusted basis, total volume increased 6% compared with the previous week.
“The 10-year Treasury yield fell last week, as investors grew concerned about increasing COVID-19 case counts and the downside risks to the current economic recovery,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “Refinance applications jumped, as the 30-year fixed mortgage rate declined to its lowest level since February 2021, and the 15-year rate fell to another record low dating back to 1990.
“Refinances for conventional loans increased over 11 percent,” Kan says. “With over 95 percent of refinance applications for fixed rate mortgages, borrowers are looking to secure a lower rate for the life of their loan.
“The purchase index decreased for the second week in a row to its lowest level since May 2020, and has now declined on an annual basis for the past three months,” Kan adds. “Potential buyers continue to be put off by extremely high home prices and increased competition. The FHFA reported yesterday that May home prices were 18% higher than a year ago, continuing a seven-month trend of unprecedented home-price growth.”
The refinance share of mortgage activity increased to 67.2% of total applications, up from 64.9% the previous week.
The adjustable-rate mortgage (ARM) share of activity increased to 3.6% of total applications.
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