After weeks and weeks of historically low mortgage interest rates having little to no impact on the volume of refinance applications, it finally appears that consumers are starting to get the message about interest rates.
According to a new report from the Mortgage Bankers Association, mortgage applications for the week ending June 17, 2016 increased 2.9% from one week earlier.
The data comes courtesy of the Mortgage Bankers Association’s Weekly Mortgage Applications Survey, which showed that the Market Composite Index, a measure of mortgage loan application volume, increased 2.9% on a seasonally adjusted basis from one week earlier.
On an unadjusted basis, the Index increased 2% compared with the previous week.
According to the MBA’s report, the increase came entirely from refinance applications.
Per the MBA’s report, the Refinance Index increased 7% from the previous week, while the seasonally adjusted Purchase Index decreased 2% from one week earlier.
According to the MBA data, the refinance share of mortgage activity increased to 57.7% of total applications from 55.3% the previous week. The adjustable-rate mortgage share of activity increased to 5.7% of total applications.
The unadjusted Purchase Index decreased 4% compared with the previous week and was 12% higher than the same week one year ago.
The Federal Housing Administration share of total applications decreased to 11.7% from 11.8% the week prior, while the Veteran Affairs share of total applications remained unchanged at 11.1%. The United States Department of Agriculture share of total applications also remained unchanged at 0.6%.
The MBA report also provides further evidence of the historically low levels interest rates are at now.
According to the MBA report, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to its lowest level since May 2013, falling from 3.79% to 3.76%.
Additionally, the average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) also fell to its lowest level since January 2011, dropping from 3.75% to 3.7%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained unchanged from 3.61%.
The average contract interest rate for 15-year fixed-rate mortgages decreased from 3.06% to 3.04%, while the average contract interest rate for 5/1 ARMs increased from 2.87% to 2.92%.