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Mortgage

Low mortgage rates drive purchase applications 5% higher

After a two week tumble, purchase applications are back up

Purchase applications bounced back last week to the highest level in almost a month with a 5% gain from the week prior, according to a report by the Mortgage Bankers Association.

The Market Composite Index, a measure of mortgage loan application volume, also increased 2.2% on a seasonally adjusted basis from one week earlier as mortgage rates continued to drop across the country.

“Mortgage rates declined to another record low as renewed fears of a coronavirus resurgence offset the impacts from a week of mostly positive economic data, such as June factory orders and payroll employment,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.

As borrowers contended with limited supply and higher home prices, the average purchase loan size rose to a survey high of $365,700, the report said.

Refinance applications gained 0.4% and overall refinance activity was up 111% from last year. The slight increase in refinancing was most likely driven by a 2% gain in conventional refinances, Kan said.

The refinance share of mortgage activity decreased to 60.1% of total applications while adjustable-rate mortgage share of activity increased to 3.4% of total applications.

“The 30-year fixed-rate slipped to 3.26% – down 53 basis points since late March,” Kan said. “Borrowers acted in response to these lower rates, after accounting for the July 4th holiday,”

Here is a more detailed breakdown of this week’s mortgage application data:

  • The FHA’s share of mortgage apps fell to 10.9% from 11.7%.
  • The VA share of applications fell to 10.4% from 10.8%
  • The USDA share of total applications increased from 0.6% to 0.7%
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) fell to 3.52% from 3.59%.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA fell to 3.31% from 3.43%.
  • The average contract interest rate for 15-year fixed-rate mortgages fell to 2.77% from 2.81%
  • The average contract interest rate for 5/1 ARMs fell to 2.98% from 3.04%

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