The refinance share of mortgage applications climbed to the highest level since January 2018 as the average 30-year fixed interest rate continued tumbling, according to the Mortgage Bankers Association.
The MBA’s Weekly Mortgage Applications Survey for the week ending June 21 showed overall applications rose 1.3% and the refinance index increased 3% from the previous week. The refinance share of mortgage activity increased to 51.5% of total applications from last week’s 50.2%.
“Markets last week reacted to a more dovish FOMC statement and forecast, with Treasury yields falling after the meeting. Mortgage rates dropped again for most loan types, which led to an increase in refinance activity, partly driven by a 9% jump in VA applications,” Joel Kan, the MBA’s associate vice president of economic and industry forecasting, said in a press release.
The seasonally adjusted purchase index dropped 1% from one week earlier, while the unadjusted purchase index decreased 2% since last week but stands 9% higher year-over-year.
“The 30-year fixed rate has now dropped in three of the last four weeks, and at 4.06%, reached its lowest level since September 2017,” Kan continued. “Despite these lower rates, purchase applications decreased 2%, but were still considerably higher (9%) than a year ago. Now at almost the half-way mark of 2019, we have generally seen a stronger purchase market than last year, despite still-tight existing inventory and insufficient new construction.”
Adjustable-rate loan activity rose to 6.5% from 6.1% of total applications, while the share of Federal Housing Administration-insured loan applications edged up to 9.6% from 9.4% the week prior.
The share of applications for Veterans Affairs-guaranteed loans increased to 12.5% from 11.9% and the U.S. Department of Agriculture/Rural Development share teetered to 0.6% from 0.5% the week before.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased 8 basis points to 4.06%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350), the average contract rate fell 4 basis points to 4%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.01% from 4.12%. The average contract interest rate for 15-year fixed-rate mortgages fell 10 basis points to 3.4%. Only the average contract interest rate for 5/1 ARMs increased, going to 3.5% from 3.45%.
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