PhotoA continuing decline in interest rates sent mortgage applications surging last week.

The Mortgage Bankers Association (MBA) reports applications shot up 14.2% in the week ending July 1. The Refinance Index jumped 21%, while the refinance share of mortgage activity rose to 61.6% of total applications -- the highest level since February -- from 58.1% the previous week.

“Interest rates continued to drop last week as markets assessed the impact of Brexit, downgrading the likelihood of additional rate hikes by the Fed, and mortgage rates for 30-year conforming loans dropped to their lowest level in over three years,” said MBA Chief Economist Mike Fratantoni. “In response, refinance application volume jumped almost 21% last week to its highest level since January 2015.”

The adjustable-rate mortgage (ARM) share of activity fell to 5.6% of total applications, the FHA share of total applications dropped to 9.5% from 10.6% a week earlier, the VA share was 12.8% -- up from 12.2% the week prior -- and the USDA share was up 0.6%.

Contract interest rates

  • The average contract interest rate for 30-year fixed-rate mortgages (FRMs) with conforming loan balances ($417,000 or less) fell nine basis points -- from 3.75% to 3.55% -- its lowest level since May 2013, with points decreasing to 0.32 from 0.36 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
  • The average contract interest rate for 30-year FRMs with jumbo loan balances (greater than $417,000) dropped to its lowest level since January 2011 -- 3.67% from 3.74% -- with points decreasing to 0.24 from 0.34 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 30-year FRMs backed by the FHA was down five basis points to 3.56%, its lowest level since May 2013, with points decreasing to 0.31 from 0.37 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 15-year fixed-rate mortgages slipped from 3.02% to 2.96%, its lowest level since May 2013, with points decreasing to 0.32 from 0.38 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week
  • The average contract interest rate for 5/1 ARMs declined three basis points to 2.85%, its lowest level since April 2015, with points decreasing to 0.26 from 0.30 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The survey covers over 75% of all U.S. retail residential mortgage applications.


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