After decreasing 2.6% the previous week, mortgage application volume jumped an impressive 14.2% on an adjusted basis during the week ended July 1, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey.
Driving the overall increase was a 21% increase in applications for refinances, which came due to a significant drop in mortgage interest rates resulting from the impact of Brexit.
As a result, applications for refinances reached the highest level since January 2015.
Applications for purchases increased 4% compared with the previous week.
On an unadjusted basis, total volume increased 14% compared with the previous week. Applications for purchases increased 4% on an unadjusted basis and increased 23% compared with the same week one year earlier.
“Interest rates continued to drop last week as markets assessed the impact of Brexit, downgrading the likelihood of additional rate hikes by the Fed, and mortgage rates for 30-year conforming loans dropped to their lowest level in over three years,” says Mike Fratantoni, chief economist for the MBA, in a statement. “In response, refinance application volume jumped almost 21 percent last week to its highest level since January 2015.”
As a result, the refinance share of mortgage activity increased to 61.6% of total applications, which is the highest level since February – up from 58.1% the previous week.
So, how much did Brexit push rates down? According to the MBA’s data, the average rate for a 30-year, fixed-rate mortgage (FRM) was 3.66%, down from 3.75% to reach the lowest level since May 2013.
The average rate for a 30-year jumbo FRM was 3.67%, down from 3.74% to reach lowest level since January 2011.
The average rate for a 30-year FRM backed by the Federal Housing Administration (FHA) was 3.56%, down from 3.61% to reach the lowest level since May 2013.
The average rate for a 15-year FRM was 2.96%, down from 3.02% to reach the lowest level since May 2013.
The average rate for a 5/1 adjustable-rate mortgage (ARM) was 2.85%, down from 2.88% to reach its lowest level since April 2015.
The ARM share of activity decreased to 5.6% of total applications.
Breaking down volume by loan type, applications for mortgages backed by the FHA represented about 9.5% of all applications – down from 10.6% the week prior. The Veterans Affairs share of total applications was 12.8%, up from 12.2%, and the U.S. Department of Agriculture share of total applications was 0.6%, down from 0.7%.