Mortgage refinance applications dropped in August, while total mortgage applications fell 7.4 percent, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 17, 2012.
The Refinance Index decreased 9 percent from the previous week to the lowest level since early July. The refinance share of mortgage activity decreased to 80.0 percent of total applications from 81.0 percent the previous week. The HARP share of refinance activity was unchanged (as of August 17) at 24 percent.
The adjustable-rate mortgage (ARM) share of activity increased to 4.0 percent of total applications. The reason behind the drops in refinancing and the sudden increase in ARM loan activity could be due to higher interest rates, according to some experts.
The average contract interest rate for 30 year fixed rate mortgages with conforming loan balances ($417,500 or less) increased to 3.86 percent from 3.76 percent, with points decreasing to 0.42 from 0.47 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
The average contract interest rate for 5/1 ARMs also increased in August, but only slightly. The average rate for a 5/1 ARM loan inched up to 2.74 percent from 2.73 percent, with points increasing to 0.38 from 0.36 (including the origination fee) for 80 percent LTV loans.
The survey covers more than 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.