Refinancing applications increased for the week ending August 4 as mortgage rates dipped, pushing overall market measurements higher.

According to the latest weekly survey from the Mortgage Bankers Association (MBA), the share of refinancing applications rose to 46.7 percent from 45.5 percent the week prior. This helped push the Market Composite Index 3.0 percent higher on both a seasonally adjusted and unadjusted basis compared to the week ending July 28.

The Index, a measure of mortgage application volume that is widely used in the home financing and housing industry, is comprised of two components: the Refinancing Index and the Purchase Index. According to an August 9 news release from the Mortgage News Daily, the Refinancing Index grew by 5.0 percent from the previous week, likely due to slightly lower mortgage rates.

The Purchase Index also increased, albeit by a smaller percentage. According to the MBA, purchase loan applications increased by 1.0 percent on a seasonally adjusted basis and by 0.3 percent on an unadjusted basis. Although the week-over-week changes are slight, when you look at the same week last year, the Purchase Index is actually 7 percent higher. This indicates a more sustained level of growth for the home buying and purchase financing markets.

The weekly MBA survey found that average interest rates were lower for all fixed rate mortgages, which is likely what helped stimulate refinancing activity. The average rate for a 30 year fixed rate mortgage with conforming loan balances of $424,100 or less was 4.14 percent, down from 4.17 percent the previous week.

The average rate for 30 year fixed rate jumbo loans dropped to 4.07 from 4.11 the previous week. The average rate for a 30 year fixed rate FHA loan decreased to 4.02 percent from 4.07 percent. Fifteen year fixed rate conforming loans had an average interest rate of 3.41 percent, down from 3.45 percent.

Applications for adjustable rate mortgages (ARMs) also increased for the week ending August 4, moving to 6.8 percent of all applications from 6.6 percent the week before. When mortgage rates start moving higher, it’s not uncommon for ARM applications to increase, due to their attractive low introductory rates. By contrast, refinancing and/or fixed rate financing is typically more common when mortgage rates decline. The MBA’s latest survey finds an unusual occurrence of both an increase in ARM application activity and refinancing; however, the ARM application growth is less than a full percentage point while refinancing activity saw a more significant increase.

Please note, the rates mentioned in this post are pulled from the Mortgage Bankers Association’s weekly survey and are subject to change. These rates also reflect averages and do not necessarily correspond with rates offered by Mid America Mortgage. If you would like to receive a free mortgage rate quote from us, please contact us via our online form or give us a call at 866-544-7013.

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