Mortgage Purchase Applications Tumble, Refinancing Shows Rare Increase

Purchase applications for home mortgages fell a seasonally adjusted 5 percent in the July 13 week, taking their year-on-year unadjusted gain to 1 percent, 7 percentage points lower than in the prior week. Applications for refinancing, which have been declining steadily along with the rise in interest rates, posted a rare increase and were up 2 percent from the prior week. The refinance share of mortgage activity thus rose 1.7 percentage points to 36.5 percent. The average interest rate for 30-year fixed rate conforming mortgages ($453,100 or less) rose 1 basis point from the prior week to 4.77 percent. Though still an improvement from the negative readings seen in June, the week's slim year-on-year gain in purchase applications does not indicate robust housing market strength. Additional clues on the state of the housing market may be found in the Housing Starts release later this morning. Please note that the prior week's results included an adjustment for the Fourth of July holiday.