The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications this morning, noting a drop of 4% in the group’s seasonally adjusted composite index, following a drop of nearly 12% for the previous week. For the second week in a row, rates for all types of fixed-rate loans rose by at least 10 basis points during the week. This week’s report has been adjusted to account for last week’s Fourth of July holiday.

The seasonally adjusted purchase index decreased by 3% from the last report. On an unadjusted basis, the composite index dropped by 23% week-over-week. The unadjusted purchase index decreased by 23% for the week, and is up about 5% year-over-year.

The MBA’s refinance index fell 4%, after sliding 16% in the previous week.

The share of refinancings fell to 64%, remaining at its lowest level in two years. Adjustable rate mortgage loans account for 7% of all applications, down from 8% in the prior week.

The average mortgage loan rate for a conforming 30-year fixed-rate mortgage rose from 4.58% to 4.68%. The rate for a jumbo 30-year fixed-rate mortgage increased from 4.68% to 4.86%. The average interest rate for a 15-year fixed-rate mortgage rose from 3.64% to 3.76%.

The contract interest rate for a 5/1 adjustable rate mortgage loan rose from 3.33% to 3.40%.

The sharp drop in the unadjusted numbers can be ignored due to last week’s holiday. And the continuing slide in the adjusted numbers and the closing gap between mortgage applications between this year and last may not be as bad as it looks.

Refinancings have slowed considerably, but mortgage rates for new purchases remain very low and once housing inventory improves more buyers are likely to turn up. Lending requirements, while still tighter than they were in the middle of the past decade, also have become a bit more accommodating for buyers.

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