After decreasing for five consecutive weeks, mortgage application volume finally regained some ground, increasing 5.3% on an adjusted basis during the week ended Aug. 2, according to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey.
The increase was mostly due to the impact of lower mortgage rates, which served to boost refinance volume. Applications for refinances increased 12% compared with the previous week and were 116% higher compared with the same week one year earlier.
Meanwhile, applications for purchases decreased 2% from one week earlier.
On an unadjusted basis, total volume increased 5% compared with the previous week.
Applications for purchases decreased 2% on an unadjusted basis but were 7% higher compared with the same week one year earlier.
“The Federal Reserve cut rates as expected last week, but the bigger influence on the financial markets was the beginning of a trade war with China,” says Mike Fratantoni, senior vice president and chief economist for the MBA, in a statement. “The result was a sharp drop in mortgage rates, which will likely draw many refinance borrowers into the market in the coming weeks.
“The 30-year fixed rate mortgage fell to its lowest level since November 2016, and the drop resulted in an almost 12 percent increase in refinance application volume, bringing the index to a reading over 2,000 – its highest over the same time period,” Fratantoni says. “We fully expect that refinance volume will jump even higher this week given the further drop in rates.”
Fratantoni points out that although “lower mortgage rates did not pull more homebuyers into the market [last week],” applications for purchases are nonetheless 7% ahead of last year’s pace.
The refinance share of mortgage activity increased to 53.9% of total applications, up from 50.5% the previous week.
The adjustable-rate mortgage (ARM) share of activity remained unchanged at 4.7% of total applications.
The average rate for a 30-year fixed-rate mortgage was 4.01%, down from 4.08% the previous week.
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