"Mortgage rates dropped again last week to their lowest level in more than 3 years, as investors continued to seek safety in US assets given the global turbulence following the Brexit vote," said Mike Fratantoni, chief economist for the MBA.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to its lowest level since May 2013, 3.6 percent, from 3.66 percent, with points increasing to 0.36 from 0.32 (including the origination fee) for 80 percent loan-to-value ratio loans. For jumbo loan balances (greater than $417,000) the average rate fell to 3.61 percent from 3.67 percent.
"For the second week in a row, jumbo rates exceeded conforming rates on 30-year fixed-rate loans, reversing the pattern that has been in place for much of the past three years," Fratantoni said. "This could be a sign that banks are being somewhat more cautious in putting long-term, fixed-rate assets on their balance sheets at these rate levels."
Mortgage applications to purchase a home, which are less rate-sensitive, didn't move at all during the week. The volume was 5 percent lower than the same week one year ago, but last year the holiday fell on the prior week, so that could be skewing the numbers.
Lower rates have not served as much enticement to homebuyers because they are not offsetting the big gains in home prices or help with the lack of supply of homes for sale. Buyer traffic fell off significantly in June, according to a monthly survey of real estate agents by Credit Suisse.