Refinancing Has Increased This Month

For the first time in several weeks, the weekly mortgage applications increased and the share of refinances also grew. According to the Mortgage Bankers Association’s (MBA) Market Composite Index, there was a rise of 0.2% for the weekly period ending August 5th. The report showed that the weekly volume was still 63% lower on a year-over-year basis.

“Mortgage applications were relatively flat, with a decline in purchase activity offset by an increase in refinance applications,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting, in a press release.

The Purchase Index did go down 1% from the previous week due to mixed signals from the housing market activity. This is the fourth time in five weeks the Purchase Index has dropped. “The purchase market continues to experience a slowdown, despite the strong job market,” Kan said. “Buyers remain on the sidelines due to still-challenging affordability conditions and doubts about the strength of the economy,” he added.

The good news is the Refinance Index increased 4% for the second straight week which aligns with Fannie Mae which reported a 2.7% increase in the dollar amount of refinancing transactions. Unfortunately, the volume was 82% lower than seen a year ago. MBA’s weekly survey broadcasted that both the volume and overall activity rose over the seven-day period by 32%.

Loan sizes by transaction type and overall averaged higher. The mean refinance amount came in at $286,000 and the average purchase-loan sizes rose 0.8% to $413,000. New applications also rose to $374,900 which was up 1% from 370,800 from the previous week. The average contract rate for a 30-year fixed mortgage with balances of $647,200 or less spiked up 4 basis points to 5.47%.

As for government-insured mortgages, the volume picked up. The Federal Housing Administration rose 12.1% from 11.9%, the Department of Veterans Affairs went up to 10.9% from 10.8%, and the US Department of Agriculture stayed the same at 0.6%.

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