By Evan Sully
(Reuters) - The number of applications for home mortgages increased last week driven by an increase in refinancing activity and an uptick in purchase activity as mortgage rates fell.
The Mortgage Bankers Association (MBA) said on Wednesday its seasonally adjusted market index rose 16.0% in the week ending on July 9 from a week earlier. This reflected a 20.4% increase in applications to refinance existing loans and an 8.3% rise in applications to purchase a home.
The average contract interest rate for traditional 30-year mortgages decreased to 3.09% last week, the lowest level since February, from 3.15% the prior week. This week's data included an adjustment for the Fourth of July holiday.
"There may have been a delayed spillover of applications from the previous week, when rates also decreased but there was not much of response in terms of refinance applications," Joel Kan, MBA's associate vice president of economic and industry forecasting, said in a statement. "Purchase applications increased last week, but average loan sizes decreased to their lowest level since January 2021."
This week's data comes just one week after the number of applications for home mortgages decreased to the lowest level since January 2020.
Rising home prices combined with insufficient supply has continued to weigh on the housing market.
"We continue to see ebbs and flows as housing demand remains strong but for-sale inventory remains low," Kan said. "However, lower rates may be helping some home buyers close on their purchases, especially first-time home buyers."