Mortgage application activity ticked up last week as interest rates declined across the board, sparking a notable jump in refinance demand, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 27.
The Market Composite Index — a measure of overall application volume — rose 2.7% on a seasonally adjusted basis from the prior week. On an unadjusted basis, total applications increased 13%.
Refinance activity led the way, with the refinance index climbing 7% week-over-week and surging 40% above the level seen during the same week last year. Meanwhile, purchase activity remained nearly flat, inching up just 0.1% on a seasonally adjusted basis.
“Mortgage rates were lower across all loan types last week, with the 30-year fixed rate declining to its lowest level since April at 6.79%,” said Joel Kan, vice president and deputy chief economist at MBA. “This decline prompted an increase in refinance applications, driven by a 10% increase in conventional applications and a 22% increase in VA refinance applications.”
Kan also noted that the average loan size on refinance applications jumped to $313,700 — the highest in over six weeks — as borrowers with larger loans proved more sensitive to rate shifts. Despite tepid weekly growth in purchase loans, there’s a silver lining: purchase activity still ran 16% higher than the same time last year.
Kan attributed the minor purchase activity growth, despite lower rates, to “overall uncertainty” that “continues to hold homebuyers out of the market.”
The refinance share of total applications rose to 40.1%, up from 38.4% the previous week. Adjustable-rate mortgages (ARMs) accounted for 7.8% of activity, also ticking upward.
The breakdown by loan type revealed a mixed picture:
- FHA loan share decreased to 18.2% from 19.3%;
- VA loan share rose to 12.0% from 11.7%; and
- USDA share held steady at 0.5%.
Average rates dropped across the board:
- 30-year fixed (conforming): Down to 6.79% from 6.88%;
- 30-year jumbo: Down to 6.78% from 6.88%;
- FHA 30-year: Down to 6.53% from 6.59%;
- 15-year fixed: Down to 6.06% from 6.11%; and
- 5/1 ARM: Down to 5.99% from 6.16%.
Each category also saw a decrease in effective rates, providing borrowers with a slightly more favorable financing environment heading into July.
The MBA’s weekly survey, which covers U.S. retail residential mortgage applications originated through retail and consumer-direct channels, has been tracking mortgage trends since 1990.
