Call it groundhog week. Mortgage application volume barely moved at all, eking out a 0.1 percent gain on a seasonally adjusted basis for the week ending July 17 from the previous week, according to the Mortgage Bankers Association (MBA). Volume, however, is better than a year ago by just over 8 percent.
What refinance volume lost, purchase volume gained. Applications to refinance fell 1 percent from the previous week, while purchase applications rose 1 percent, both seasonally adjusted. Purchase applications are still 18 percent higher than they were a year ago, but are down five percent in the last four weeks.
There was one noteworthy move in the data: The average loan size appears to have shrunk on purchase applications since May, even as home prices rise. It is now at the lowest level since February.
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"Given the overall increase in purchase volume, we view this as a positive development, as it signifies more first-time homebuyers getting into the market," noted Mike Fratantoni, chief economist for the MBA. "We are not back to levels typical of a healthy market, but for the first time in a while it is steadily improving."
Mortgage rates have been volatile since early May, but seem to have settled again. This may be the cause of a pull-back in the share of adjustable-rate loan applications (ARMs), which had been rising steadily. ARMs offer lower interest rates but are higher risk in a rising rate environment.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) remained unchanged at 4.23 percent, with points decreasing to 0.34 from 0.39 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans, according to the MBA.