Why Mortgage Applications Are on the Rise

The volume of the total mortgage application, on a seasonally adjusted basis, increased 1.6 percent last week compared to the previous week, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey. On an unadjusted basis, the Index increased 2 percent compared to the prior week.

The share of Refinance applications increased 4 percent from the previous week. The Purchase Index on an adjusted basis rose 0.3 percent from one week earlier. On the other hand, the unadjusted Purchase Index increased 1 percent compared with the previous week and was 1 percent higher than the same week one year ago.

"Mortgage rates declined once again, as concerns about the slowing global economy and status of Brexit continued to drive investors' demand for U.S. Treasuries, ultimately pushing yields lower," said Joel Kan, AVP of Economic and Industry Forecasting. Kan pointed out that rates for most loan types were “at their lowest levels in over a year.”

"Entry-level housing supply remains weak and is likely hindering some would-be first-time buyers from finding a home. This—along with faster growth in the higher price tiers—is why the average loan application size has risen to a new high for three straight weeks," Kan added.

According to the Index, the refinance share of mortgage activity increased to 39.2 percent of total applications from 38.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.1 percent of total applications. The FHA share of total applications remained unchanged from 10.4 percent the week prior while the VA share of total applications increased to 10.6 percent. The USDA share of total applications also remained unchanged at 0.6 percent.

Here’s how the average contract interest rates performed for various loans:

• For 30-year fixed-rate mortgages with conforming loan balances decreased to 4.55 percent from 4.64 percent
• The rate for 30-year fixed-rate mortgages with jumbo loan balances decreased to 4.37 percent from 4.45 percent
• FHA-backed 30-year fixed-rate mortgages decreased to 4.59 percent from 4.61 percent
• The 15-year fixed-rate mortgages decreased to 3.97 percent from 4.02 percent
• The rate for 5/1 ARMs decreased to 3.99 percent from 4.09 percent

The effective rate for all loan types decreased from last week.