Mortgage applications rose 3.6 percent on a seasonally adjusted basis for the week period ending August 14. The increase was fueled by a surge in refinancing loan applications.
The number of refinancing applications jumped to 7 percent from previous week, states CNBC, the highest level since May. The data is based on the report released by the Mortgage Bankers Association (MBA), which indicated that the share of refinancing request for the period increased to 55.5 percent from total mortgage applications. This is higher than the 53.1 percent posted the previous week.
In the report, CNBC also mentioned average mortgage loan rates declining to 4.11 percent for fixed 30 year mortgages with conforming loan balances of $417,000 or less. This is the lowest level since May and lower by 2 percentage points from last week's 4.13 percent, according to MBA. Lynn Fisher, MBA's vice president of research and economics, attributed last week's low interest rates to the market's concerns over the Chinese economy.
Fisher added, "The pick-up in refinance activity was led by larger loan sizes on average, as continued investor interest drove jumbo interest rates down even further. Changes in refinance activity were broad-based, increasing nearly 7 percent for each of the major components of our survey-conventional, FHA and VA loans."
On an unadjusted basis, the composite index increased to 3 percent week over week, reports the site 24/7 WallSt.com. The seasonally adjusted purchase index also fell to 1 percent, compared to the previous week which ended August 7. Despite the decline, the volume of application to purchase a home is still 19 percent higher than the same period last year.
The CNBC report further stated that even if the rates did not move much in the previous week, this could still change with the expected Wednesday release of minutes from the Federal Reserve's latest meeting. Investors are waiting whether the Federal Reserve will impose rate increases this coming September. Matthew Graham, chief operating officer at Mortgage News Daily wrote that "rates could rise quickly" if the Feds will enforce a rate hike next month.
He added that investors have become anxious given the Feds' last policy statement which stated "some further improvement was needed in labor markets before hiking rates."