The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending July 2, 2010.  The Market Composite Index, a measure of mortgage loan application volume, increased 6.7 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 6.5 percent compared with the previous week.

The Refinance Index increased 9.2 percent from the previous week and is the highest Refinance Index observed in the survey since the week ending May 15, 2009. The seasonally adjusted Purchase Index decreased 2.0 percent from one week earlier. The Purchase Index has decreased eight of the last nine weeks.  The unadjusted Purchase Index decreased 2.3 percent compared with the previous week and was 34.7 percent lower than the same week one year ago.

"Mortgage rates remained near record lows last week, as incoming data on the job and housing markets were weaker than anticipated.  As more homeowners locked in to these low rates, the level of refinance applications increased to a new 13-month high," said Michael Fratantoni, MBA's Vice President of Research and Economics.  "For the month of June, purchase applications declined almost 15 percent relative to the prior month, and were down more than 30 percent compared to April, the last month in which buyers were eligible for the tax credit."

The four week moving average for the seasonally adjusted Market Index is up 6.4 percent.  The four week moving average is up 0.1 percent for the seasonally adjusted Purchase Index, while this average is up 8.3 percent for the Refinance Index.

The refinance share of mortgage activity increased to 78.7 percent of total applications from 76.8 percent the previous week, which is the highest refinance share observed in the survey since April 2009. The adjustable-rate mortgage (ARM) share of activity increased to 5.4 percent from 4.7 percent of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages increased to 4.68 percent from 4.67 percent, with points decreasing to 0.86 from 0.96 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.  The effective rate slightly decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 4.11 percent from 4.06 percent, with points decreasing to 0.93 from 0.97 (including the origination fee) for 80 percent LTV loans. The effective rate also increased from last week.

The average contract interest rate for one-year ARMs increased to 7.20 percent from 7.05 percent, with points decreasing to 0.24 from 0.27 (including the origination fee) for 80 percent LTV loans.