Applications to refinance loans, which are most rate sensitive, increased 3 percent from the previous week, but applications to purchase properties grew a more robust 7 percent. Purchase applications are now 32 percent higher than a year ago.
The moves came as the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.23 percent from 4.26 percent, with points increasing to 0.37 from 0.33 (including the origination fee) for 80 percent loan-to-value ratio loans.
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"Overall, trends in mortgage applications last week were consistent with the ongoing shift towards a purchase market accompanied by growth in employment and higher interest rates. Although contract interest rates fell by 3 basis points due to economic uncertainty abroad last week, they remain 40 basis points above April levels and the refinance share of mortgage applications fell to 48 percent, the lowest rate since June of 2009," said Lynn Fisher, the association's vice president for research and economics.
Higher interest rates in general have energized the adjustable-rate-mortgage share of activity, which increased to 7.1 percent of total applications. ARMs offer lower interest rates, but higher risk for borrowers.