Record Low Mortgage Rates Lead to Jump in Refinance Activity

Washington, D.C.—Mortgage applications increased 16.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 13, 2012.

The Market Composite Index, a measure of mortgage loan application volume, increased 16.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 46 percent compared with the previous week. The Refinance Index increased 22 percent from the previous week and is at the highest level since mid-June. The seasonally adjusted Purchase Index decreased 0.1 percent from one week earlier. The unadjusted Purchase Index increased more than 25 percent compared with the previous week and was 3 percent lower than the same week one year ago.

The refinance share of mortgage activity increased to 80.1 percent of total applications, up from 77 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 4.1 percent of total applications.

In June, the number of both purchase and refinance applications increased the most in the West South Central region, with a gain of 22.0 percent in purchase and 63.7 percent in refinance applications. The region with the smallest increase in purchase applications was the New England region, growing by 9.4 percent while refinance applications increased the least in the Pacific region with a gain of 30.9 percent.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 3.74 percent, the lowest rate in the history of the survey, from 3.79 percent, with points increasing to 0.45 from 0.36 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 3.98 percent, the lowest rate in the history of the survey, from 4.05 percent, with points decreasing to 0.32 from 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.55 percent, the lowest rate in the history of the survey, from 3.63 percent, with points increasing to 0.44 from 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.12 percent, the lowest rate in the history of the survey, from 3.15 percent, with points increasing to 0.48 from 0.43 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs remained unchanged at 2.71 percent, matching the lowest rate in the history of the survey, with points increasing to 0.51 from 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.