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Mortgage applications fall 6.5% as rates hover around 3%

But the home purchase market home remains a "bright spot for the overall economy"

Despite mortgage rates that continue to hover around 3%, mortgage applications fell 6.5% last week, according to a report from the Mortgage Bankers Associations.

As the industry continued its dialogue regarding the proposed refinance fee, the refinance index fell 10% from the previous week, but remained 34% higher than the same week one year ago. As far as the long-term impact that the proposed fee will have on the refinance index, the industry will have to wait until Dec. 1., as the FHFA announced on Tuesday that it delayed the fee that was originally set for Sept 1.

“Conventional refinance applications fell 11% and government refinance applications fell 6%, which pushed the total refinance index to its lowest weekly level since July,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.

The refinance share of mortgage activity also fell to 62.6% last week from 64.6% the week before, according to the report.

Purchase applications, however, remained steady as the seasonally adjusted purchase index rose .4% from one week earlier.

“The home purchase market remains a bright spot for the overall economy. Purchase applications were essentially unchanged but were 33% higher than a year ago – the 14th straight week of year-over-year gains,” said Kan. “Mortgage rates at record lows and households looking for more space are driving this summer’s surge in demand.”

The adjustable-rate mortgage (ARM) share of activity decreased to 2.6% of total applications.

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

  • The FHA’s share of mortgage apps increased to 10.5% from 10.3%.
  • The VA share of applications increased to 11.8% from 11.2%.
  • The USDA share of total applications remained unchanged from 0.6% the week prior.
  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) fell to 3.11% from 3.13%.
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) remained unchanged from 3.41% the week prior.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained unchanged from 3.16% the week prior.
  • The average contract interest rate for 15-year fixed-rate mortgages fell to 2.7% from 2.73%.
  • The average contract interest rate for 5/1 ARMs increased to 3.14% from 2.95%.

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