MBA: Mortgage Application Volume Continues To Drop As Rates Rise

U.S. mortgage application volume dropped 2.6%, on a seasonally adjusted basis, for the week ending July 12 compared to the week prior, according to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.

On an unadjusted basis, the index increased 22% compared with the previous week, however, that week included the Fourth of July holiday weekend, which typically results in a significant decline in volume.

Refinancings decreased 4% from the previous week to hit their lowest level since July 2011, according to the MBA.

The purchasing index increased 1%, on an adjusted basis, from one week earlier. On an unadjusted basis, it increased 26% compared with the previous week, and was 5% higher than the same week one year ago.

The refinance share of mortgage activity decreased to 63% of total applications, down slightly from 64% the previous week, to reach the lowest level since April 2011.

Adjustable-rate mortgages (ARMs) made up 7.2% of total applications. The Home Affordable Refinance Program's share of refinance applications decreased to 34% from 35% the week prior.

The average rate on 30-year fixed-rate mortgages with conforming loan balances was unchanged at 4.68%. Rates on similar mortgages with jumbo-loan balances decreased to 4.81% from the previous week's 4.86%.

The average rate on 30-year fixed-rate mortgages backed by the Federal Housing Administration increased slightly to 4.38% from 4.37% the previous week.

The average rate for 15-year fixed-rate mortgages dipped to 3.7% from the prior week's 3.76%. The 5/1 ARM average decreased to 3.39% from 3.4%.

It was the third week in a row that mortgage application volume declined, a trend that began after the Federal Reserve announced on June 19 that it would start curtailing its bond-buying program in the fourth quarter.

The announcement, in turn, resulted in increased market volatility and a subsequent spike in mortgage interest rates.

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