Demand for purchase loans inched up for the third week in a row at the end of July, but was still down nearly 34 percent from a year ago, the Mortgage Bankers Association said in releasing the results of its Weekly Mortgage Applications Survey.

Demand for purchase loans was up a seasonally adjusted 1.5 percent during the week ending July 30, while applications for refinancings rose 1.3 percent from the previous week.

Demand for purchase loans inched up for the third straight week at the end of July, but was still down nearly 34 percent from a year ago, the Mortgage Bankers Association said in releasing the results of its Weekly Mortgage Applications Survey.

Demand for purchase loans was up a seasonally adjusted 1.5 percent during the week ending July 30, while applications for refinancings rose 1.3 percent from the previous week.

The growing demand for purchase loans was driven by a 3.4 percent increase in applications for FHA and other government-backed loans. Demand for conventional loans was essentially flat, the MBA said.

When not adjusted for seasonal factors, the survey showed demand for purchase loans up 7.1 percent from a week ago, but down 33.7 percent from the same time a year ago.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.6 percent from 4.69 percent, with points increasing to 0.93 from 0.88 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate also decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.03 percent from 4.12 percent, with points increasing to 1.01 from 0.83 (including the origination fee) for 80 percent LTV loans. This is the lowest 15-year contract rate ever recorded in the survey. The effective rate also decreased from last week.

The average contract interest rate for one-year ARMs decreased to 7.1 percent from 7.15 percent, with points decreasing to 0.21 from 0.23 (including the origination fee) for 80 percent LTV loans.

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