“It’s a combination of both cheap money and home values are starting to creep up,” Rob Killinger, a Massachusetts-based loan officer told Mortgage Professional America. “Eventually we’ll see rates increase and that will cut some folks out of the market and higher home values will be a double-edged sword.”
So while originations may be up, that trend could be short-lived if rates spike as expected in the coming months.
According to the MBA survey, mortgage applications increased 4.7 percent over prior week and refinances increased six percent.
"Despite recent concerns about the economy, both purchase and refinance applications increased strongly in response to lower interest rates last week," Lynn Fisher, MBA's vice president of research and economics said in a release. "Refinance activity was the highest since May when rates were last at this level. The increase in purchase activity was also notable for this time of year, up 23 percent relative to a year ago."
Refinance market share continues to grow jumping to 51.3 percent of total applications, up from the previous week’s mark of 50.6 percent.
Average rates, meanwhile, fell. The average contract interest rate for a 30-year fixed-rate mortgage for conforming loans fell to 4.13 percent, down from 4.17 percent.
loan rates also decreased. The average rate for a 30-year jumbo was 4.08 percent, down from 4.12 percent.
Mortgage applications increased 4.7 percent week-over-week for the week ending July 31, according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey, and it’s due to two major factors, according to originators.