Mortgage applications rose a seasonally adjusted 3.9% in the week ended July 12, according to data released Wednesday, largely as borrowers took advantage of falling interest rates to refinance their home loans. Mortgage Bankers Association (Master of Business Administration).
“Mortgage rates fell last week amid recent signs of cooling inflation and the increased likelihood of lower mortgage rates United States Federal Reserve Rate cuts later in the year pulled them down,” MBA vice president and deputy chief economist Joel Kan said in a statement.
In terms of inflation, the latest consumer price index (CPI) from May to June fell by 0.1%, an annual increase of 3%, the slowest increase in more than three years. In addition, Federal Reserve Chairman Powell said on Monday that policymakers will not wait until inflation reaches 2% before lowering the benchmark interest rate. Since July 2023, the federal funds rate has been in a target range of 5.25% to 5.5%.
As a result, mortgage rates are trending downward. according to house lineThe average 30-year conforming loan rate was 7.04% Wednesday, down from 7.11% a week ago, according to the Mortgage Rate Center. The 15-year conforming loan rate saw an even sharper correction, falling from 6.89% to 6.71% this week.
Refinancing applications accounted for the bulk of MBA’s overall index growth, with seasonally adjusted numbers rising 15% week over week and 37% year over year. Overall, refinance loans accounted for 38.8% of all applications, up from 34.9% the previous week.
MBA’s survey, which covers 75% of all retail residential mortgage applications in the U.S., showed the average contract interest rate for 30-year fixed-rate conforming loans with balances of $766,550 or less fell to 6.87% in the week ended July 12, That compares with 7% the week before. The average interest rate for jumbo loans (balances over $766,550) fell to 6.75% from 6.87%.
Adjustable-rate mortgages (ARMs) fell to 5.8% of all application activity. federal housing administration (FHA) loans accounted for 13.5% of activity, up from 12.5% the previous week. U.S. Department of Veterans Affairs The share of (VA) loans increased from 13.7% to 15.2%, while U.S. Department of Agriculture (USDA) loan ratio dropped to 0.4%.
However, convincing borrowers to take on a new mortgage was more challenging last week, as purchase applications fell 3% from the previous week and 14% from a year ago.
“Application activity increased 4% as refinances jumped 15% to their highest level since August 2022,” Kan said. “While FHA and VA refinance applications accounted for a large portion of the increase, these loans may be The rates recently offered are even higher than those currently being offered.”
