A surge in applications for mortgage refinances –especially government-backed refinances — drove an impressive increase in overall new applications for residential loans.
Based on the Market Composite Index for the week ended Aug. 5, new mortgage applications climbed over 7 percent on a seasonally adjusted basis from a week earlier.
Even without any seasonal adjustments, the index —
a measure of retail residential loan application volume — rose 7 percent compared to the report from the prior week.
The index is included in the Weekly Mortgage Applications Survey from the Mortgage Bankers Association. The survey reportedly covers more than three-quarters of all mortgage applications.
A 10 percent seasonally adjusted increase from the week ended July 29 was reported for refinance applications.
Government refinance business shot up 27 percent, while conventional refinances rose just 6 percent.
Overall refinance share, meanwhile, widened to 62.4 percent from 60.7 percent the prior week and 53.1 percent the same week in 2015.
MBA reported that applications for purchase financing moved up 3 percent from the last report.
Even without any seasonal adjustments, purchase activity was up 2 percent from a week earlier and increased 13 percent versus the week ended Aug. 7, 2015.
A tenth of all mortgage applications were for loans insured by the Federal Housing Administration, widening from a 9.4 percent share in the last report. FHA share was reduced, however, from 13.3 percent in the year-earlier report.
Department of Veterans Affairs applications made up another 13.0 percent of overall activity in the week ended Aug 5, 2016. VA share was fatter than 12.1 percent a week prior and
11.3 percent a year prior.
MBA’s data indicate that interest rates on jumbo mortgages were a basis point less than rates on conforming loans. The jumbo-conforming spread thinned from a negative 2 BPS the previous week
and a negative 5 BPS a year previous.
The report indicated that applications for adjustable-rate mortgages accounted for 4.7 percent of total volume, the same as in the previous report.
ARM share, however, has thinned from 6.8 percent the same week last year.