According to the MBA, its seasonally adjusted index of mortgage activity, including both home purchase and refinance demand, rose 1.9% in the week ending on July 4. The index was adjusted for the Independence Day holiday. On an unadjusted basis, the index fell 19% from the previous week.
The index of refinance applications increased 0.4% while the gauge for home purchase loans, which indicates home sales, rose 3.7%. Refinance share of mortgage activity has still fallen to 52% from 53% last week, while the adjustable rate mortgage share of activity remained unchanged at 8%.
The contract interest rate and effective rate for a 30-year fixed-rate mortgage with a conforming balance rose during the week to an average of 4.32% from 4.28% the previous week, with points increasing to 0.16 from 0.14.
Jumbo 30-year fixed loans dropped to 4.24% from 4.26%, with a higher effective rate, while 30-year FHA loans saw a rate increase of 3 basis points to 4.02%. The 15-year fixed rate loan was the only mortgage to see the interest rate decline, with an average contract rate of 340%, down from 3.42%, with an unchanged effective rate.
The MBA survey covers more than 75% of U.S. retail residential mortgage applications. This weekly survey has been conducted since 1990 with survey respondents that include mortgage bankers, commercial banks and thrifts.
The rise in mortgage demand comes as foreclosure starts increased for the first time in nine months, although the historical trend is still showing improvement. More than half of the foreclosure starts were repeat foreclosures, however, not new entries. Mortgage delinquencies and foreclosures continue to decline across the country, and foreclosure inventory recently hit the lowest level since 2008.
Negative equity is also down to just 8.9% of total loans. With more homeowners enjoying positive equity for the first time in years, many are able to put their homes on the market, which is helping to boost the supply of homes as the spring home-buying season kicks into high gear.