Mortgage applications increased 14.2% from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending July 1, 2016.

The Market Composite Index, a measure of mortgage loan application volume, increased 14.2 % on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 14% compared with the previous week. The Refinance Index increased 21% from the previous week to the highest level since January 2015. The seasonally adjusted Purchase Index increased 4% from one week earlier. The unadjusted Purchase Index increased 4% compared with the previous week and was 23% higher than the same week one year ago.

"Interest rates continued to drop last week as markets assessed the impact of Brexit, downgrading the likelihood of additional rate hikes by the Fed, and mortgage rates for 30-year conforming loans dropped to their lowest level in over 3 years," said Mike Fratantoni, MBA's Chief Economist. "In response, refinance application volume jumped almost 21% last week to its highest level since January 2015."

The refinance share of mortgage activity increased to 61.6% of total applications, the highest level since February 2016, from 58.1% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.6% of total applications.

The FHA share of total applications decreased to 9.5% from 10.6% the week prior. The VA share of total applications increased to 12.8% from 12.2% the week prior. The USDA share of total applications decreased to 0.6% from 0.7% the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to its lowest level since May 2013, 3.66%, from 3.75%, with points decreasing to 0.32 from 0.36 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to its lowest level since January 2011, 3.67%, from 3.74%, with points decreasing to 0.24 from 0.34 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to its lowest level since May 2013, 3.56 percent, from 3.61%, with points decreasing to 0.31 from 0.37 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to its lowest level since May 2013, 2.96%, from 3.02%, with points decreasing to 0.32 from 0.38 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week

The average contract interest rate for 5/1 ARMs decreased to its lowest level since April 2015, 2.85%, from 2.88%, with points decreasing to 0.26 from 0.30 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.