The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting an increase of 5.3% in the group’s seasonally adjusted composite index for the week ending August 2. Mortgage interest rates fell on all five types of loans the MBA tracks. Rates have hit their lowest level since November 2016, according to the MBA.

On an unadjusted basis, the MBA’s composite index increased by 5% in the past week. The seasonally adjusted purchase index decreased by 2% compared with the week ended July 29. The unadjusted purchase index also slipped by 2% for the week and was 7% higher year over year.

Mortgage loan rates for a top-tier 30-year fixed-rate loan rose by about 0.2 percentage points to 4.12% last week, according to Mortgage News Daily. As of Tuesday night, top-tier borrowers were paying 3.61% for that loan. The week-over-week yield on a 10-year U.S. Treasury note dipped from 2.06% to 1.72% as of last night’s close. A year ago, the 10-year note yielded 2.94%.

Mike Fratantoni, MBA senior vice-president and chief economist, said:

The Federal Reserve cut rates as expected last week, but the bigger influence on the financial markets was the beginning of a trade war with China. The result was a sharp drop in mortgage rates, which will likely draw many refinance borrowers into the market in the coming weeks. The 30-year fixed rate mortgage fell to its lowest level since November 2016, and … [w]e fully expect that refinance volume will jump even higher this week given the further drop in rates.

The MBA’s refinance index increased by 12% week over week, and the percentage of all new applications that were seeking refinancing rose from 50.5% to 53.9%.

Adjustable-rate mortgage loans accounted for 4.7% of all applications, unchanged compared with the prior week.

According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage fell from 4.08% to 4.01%. The rate for a jumbo 30-year fixed-rate mortgage dropped from 4.04% to 3.96%. The average interest rate for a 15-year fixed-rate mortgage slipped from 3.48% to 3.37%.

The contract interest rate for a 5/1 adjustable-rate mortgage loan tumbled from 3.52% to 3.36%. Rates on a 30-year FHA-backed fixed-rate loan decreased from 3.94% to 3.86%.

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