Applications to refinance, which are extremely rate-sensitive, fell 4 percent from the previous week and the refinance share of total applications fell to 51 percent. This as the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.07 percent from 4.04 percent, with points increasing to 0.35 from 0.32 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.
After sitting unchanged for two weeks, purchase activity picked up very slightly, led by low or no down payment Veterans Administration (VA) loans. Purchase volume rose one percent week to week and is now 14 percent higher than the same week one year ago. VA loans made up 12 percent of total application volume, indicating that the least expensive loans are becoming a growing share.
Read More7 major housing markets now 'overvalued'
Mortgage rates have not moved much in the past few days but have been plenty volatile in the past few weeks. Increasing talk of higher rates in the second half of this year has some analysts suggesting that buyers who need to borrow had better do it now. While rates have surprised to the downside in the past year, this particular rise appears to be more stubborn.
"Rates have made several attempts to move lower after spiking in early May, but each time they've quickly run out momentum," noted Matthew Graham of Mortgage News Daily. "Underlying market conditions are once again signaling a bounce attempt is underway, but it's not safe to plan on the good times continuing until/unless we see several days in the near future with even stronger improvements."