As Rates Stay Near Record Lows in U.S., Mortgage Refi Activity Hits 3-Year Highs

---

According to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending July 27, mortgage applications increased 0.2 percent from one week earlier.

The Market Composite Index, a measure of mortgage loan application volume, increased 0.2 percent to its highest level since June 8, 2012 on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index also increased 0.2 percent compared with the previous week.

The Refinance Index increased 0.8 percent from the previous week to its highest level since the week ending April 17, 2009.  The slight increase in refinance activity was muted by a 6 percent drop in government refinance applications, while conventional refinance activity increased about 2 percent over the week.

The seasonally adjusted Purchase Index decreased about 2 percent from one week earlier. The unadjusted Purchase Index also decreased compared with the previous week.

The refinance share of mortgage activity increased to 81 percent of total applications from the previous week to its highest level since the week ending January 20, 2012. The adjustable-rate mortgage (ARM) share of activity decreased to 4.1 percent of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 3.75 percent from 3.74 percent, with points increasing to 0.51 from 0.43 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.  The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) increased to 4.01 percent from 3.99 percent, with points increasing to 0.32 from 0.28 (including the origination fee) for 80 percent LTV loans.  The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained unchanged at 3.52 percent from the previous week, which is the lowest FHA rate recorded in the survey, with points increasing to 0.55 from 0.52 (including the origination fee) for 80 percent LTV loans.  The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.09 percent from 3.07 percent, with points increasing to 0.49 from 0.45 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs increased to 2.73 percent from 2.68 percent, with points increasing to 0.41 from 0.35 (including the origination fee) for 80 percent LTV loans.  The effective rate increased from last week.