NEW YORK (Reuters) - Applications for government mortgage refinancing hit an all time high last week, even as total applications for home mortgages fell, an industry group said on Wednesday.
Lower premiums from the Federal Housing Authority (FHA) caused FHA refinance volume to more than double last week, while convential refinance applications fell, the Mortgage Bankers Association said.
“Refinance volume increased again last week, but the composition of activity changed markedly,” said Michael Fratantoni, MBA’s vice president of research and economics.
“New, lower FHA premiums on streamlined refinance loans came fully into effect, and borrowers seized the opportunity to lower their mortgage rates without increasing their FHA premiums.”
Government refinance applications were up 121.3 percent from last week, and 410.9 percent from a year ago.
The average contract interest rate on 30-year fixed-rate mortgages fell one basis point to 3.87 percent, matching the lowest rate since the survey began.
The group said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 0.8 percent in the week ended June 15.
The MBA’s seasonally adjusted index of refinancing applications rose one percent, while the gauge of loan requests for home purchases, a leading indicator of home sales, fell 8.5 percent.
The refinance share of total mortgage activity increased to 81 percent of applications from 79 percent the week before.
The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.
Reporting by Anna Louie Sussman; Editing by Diane Craft