Mortgage interest rates rose last week, but that didn't throw any cold water on the mini-refinance boom that's been going on for the past month.
Applications for loans to purchase a home, however, came in weaker. Consequently, total mortgage application volume was essentially flat, rising just 0.5% for the week, according to the Mortgage Bankers Association's seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 3.92% from 3.90%, with points decreasing to 0.35 from 0.37 (including the origination fee) for loans with a 20% down payment.
Despite the slight rate increase, applications to refinance a home loan rose 4% from the previous week and were 199% higher than the same week one year ago. At this time last year, the average rate on the 30-year fixed was 118 basis points higher, at 5.10%.
Mortgage applications to purchase a home fell 4% for the week but were still 12% higher than the same week one year ago.
"Purchase applications slowed for the second week in a row," said Joel Kan, the MBA's associate vice president of economic and industry forecasting. "While near-term economic uncertainty is still a factor, other fundamental issues, such as a lack of housing inventory in many markets, is preventing purchase activity from meaningfully rising."
The refinance share of mortgage activity increased to 62.2% of total applications from 60.4% the previous week.
Mortgage rates continue to move higher this week, signaling to some that the recent lows in bond yields are over for now. U.S. investors were buoyed by a potential Brexit deal Tuesday and poured into the stock market. The next meaningful read on the U.S. economy is the retail sales report, scheduled to be released Wednesday.
"In general, if the report is much stronger than expected, is should keep upward pressure on rates," wrote Matthew Graham, chief operating officer at Mortgage News Daily. "If it's weaker, however, rates would have a better chance to recover. Either way, geopolitical and trade-related headlines remain capable of causing plenty of intraday volatility."