Mortgage applications ended two weeks of declines to notch a slight uptick during the second week of July, even as mortgage rates marched higher, the Mortgage Bankers Association (MBA) reported Wednesday.
The MBA’s Market Composite Index, a measure of mortgage loan application volume, increased 1.9% over the seven-day period ending July 17, as 6% weekly growth in the seasonally adjusted purchase index offset a 2% pullback in refinances.
Refinance activity was 7% higher than a year ago, while purchases squeezed by with 0.2% growth from the same week last year. Purchases had declined 2% from year-ago levels over the previous week, which followed the July 4 holiday weekend.
The refinance share of mortgage activity ultimately declined last week as borrowing costs rose, falling to 41.2% of activity from 43.2% the previous week.
“Growing home inventory in many markets is supporting more purchase activity,” said Mike Fratantoni, chief economist at the MBA, in commentary accompanying the figures.
But average mortgage rates on typical 30-year home loans recorded their fourth consecutive week of increases to land at 6.69% in mid-July — just 0.15% shy of year-ago levels.
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Mortgage rates on 30-year fixed-rate loans have been over 6.5% for 10 straight weeks since early May, according to MBA data, with the more recent movement higher in July anticipated by industry analysts.
“Incoming data showed that inflation dropped in June, but with oil prices spiking again, that improvement seems unlikely to continue in July data,” added Fratantoni, “and mortgage rates are likely to remain higher as a result.”
The consumer price index came in cooler than expected in June, amid a temporary drawdown in hostilities between the U.S. and Iran in their now 5-month-old war. Fighting flared once more after the July 4 weekend, pushing oil prices and rate volatility higher.
Across government mortgage channels, the share of applications for loans insured by the Federal Housing Administration (FHA) declined to 17% from 17.7% the prior week, while applications for loans backed by the Department of Veterans Affairs accounted for 13.2% of all activity, down from 13.6%.
The average mortgage rate for 30-year fixed-rate loans backed by the FHA inched up to 6.34% from 6.33% the previous week.
