The Mortgage Bankers Association’s market composite index, a measure of home loan activity, rose 6.7% on a seasonally adjusted basis the week ended July 2 as more people refinanced their mortgages.
The refinance component increased 9.2% from the prior week to reach a 14-month high. The purchase component fell 2.0% and has now retreated eight of the last nine weeks.
“Mortgage rates remained near record lows last week, as incoming data on the job and housing markets were weaker than anticipated,” Michael Fratantoni, the association’s vice president of research and economics, said in a written statement.
The refinance share of mortgage activity increased to 78.7% of all applications from 76.8% the previous week, the highest such share since April 2009. The adjustable-rate mortgage share of activity increased to 5.4% from 4.7%.
Interest rates rose slightly, but remain historically low.
The average contract interest rate for 30-year fixed-rate mortgages increased to 4.68% from 4.67%, with points decreasing to 0.86 from 0.96 — including the origination fee — for 80% loan-to-value ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages rose to 4.11% from 4.06%, with points decreasing to 0.93 from 0.97 — including the origination fee — for 80% loan-to-value ratio loans.
The average contract interest rate for one-year adjustable-rate mortgages climbed to 7.20% from 7.05%, with points decreasing to 0.24 from 0.27 — including the origination fee — for 80% loan-to-value ratio loans.
The weekly MBA survey captures 50% of all U.S. retail residential mortgage activity and dates back to 1990.
“As more homeowners locked in to these low rates, the level of refinance applications increased to a new 13-month high,” Fratantoni said.