Fewer consumers applied for mortgages last week even as interest rates declined by 3 to 4 basis points for all product types, according to the Mortgage Bankers Association.
"Mortgage rates right now are comparable to the average rate of 4.1% for June, but refinances last week were 7% lower than last month," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release. "This is an indication that as we see rates lower for longer, borrowers need more of a drop in rates to consider refinancing. Purchase applications decreased for the second straight week and have been somewhat volatile lately, but were still 6% higher than a year ago."
The trade group's Weekly Mortgage Applications Survey for the week ending July 19 found activity fell by 1.9% on a seasonally adjusted basis and by 2% on an unadjusted basis
The refinance index decreased 2%, although it was 81% higher than the same week one year ago. Their share decreased to 49.8% of total applications from 50% the previous week.
The bright spot, Kan said, was "we did see government refinance applications increase, driven solely by a 12% rise in FHA applications."
The seasonally adjusted purchase index decreased 2% from one week earlier, while the unadjusted purchase index decreased 1% compared with the previous week but was 6% higher than the same week one year ago.
Adjustable-rate mortgage activity decreased to 4.7% from 4.9% of total applications, while the share of Federal Housing Administration-insured loan applications increased to 11.3% from 10.6% the week prior.
The share of applications for Veterans Affairs-guaranteed loans increased to 13.1% from 12.9% and the U.S. Department of Agriculture/Rural Development share remained unchanged from 0.6% the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased 4 basis points to 4.08%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350), the average contract rate decreased 3 basis points to 4.04%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased 3 basis points to 3.98%. For 15-year fixed-rate mortgages, the average decreased 3 basis points to 3.45%. The average contract interest rate for 5/1 ARMs decreased 1 basis point to 3.57%.
