WASHINGTON – Mortgage application volume rose 3.4 percent during the week ending Aug. 10, according to the industry trade group Mortgage Bankers Association's weekly application survey.
The MBA's market composite index rose to 678.7 from 656.6 the previous week.
Refinance volume increased 2.6 percent from the prior week, while purchase volume jumped 3.9 percent. Refinance volume accounted for 40 percent of total applications. Compared to the year-earlier level, the index was up 20.6 percent.
The rise in volume could be deceiving of the true mortgage landscape though, the MBA's chief economist warned.
"Recent upheavals in the mortgage industry may be temporarily increasing the level of retail application activity at the large lenders that participate in the MBA survey rather than representing a systemwide increase," Doug Duncan, the MBA's chief economist said. The weekly survey accounts for about half of all mortgage originations each week.
Mortgage lenders of all sizes have been struggling in recent months as worries about credit quality freeze up lenders' ability to borrow money used to originate loans. Thornburg Mortgage Inc. (TMAPRC) said Tuesday it was stopping its rate lock-ins for four days as it tries to manage margin calls and disappearing liquidity. In recent weeks American Home Mortgage Investment Co. (AHM), Aegis Mortgage Corp. and HomeBanc (HMB) Mortgage Co. became the latest in a string of dozens of lenders to file for bankruptcy protection.
Adjustable-rate mortgages, which have been among the worst-performing loans, accounted for 21 percent of lending volume in the week, down from 27.2 percent during the same week one year ago.
The average interest rate for a traditional, 30-year fixed-rate mortgage increased to 6.45 percent from 6.41 percent the previous week.