Falling Rates Drive Increase in Mortgage Apps

A drop in key mortgage rates spurred the first solid uptick in mortgage applications in three weeks, the Mortgage Bankers Association reported this morning in its Weekly Applications Survey for the week ending Sept. 18.  

The previous week’s results included an adjustment for the Labor Day holiday.  

The Market Composite Index increased by nearly 14 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 26 percent compared to the previous week.   

The Refinance Index increased by 18 percent from the previous week. The refinance share of mortgage activity increased to 58.4 percent of total applications from 56.2 percent the previous week.  

The seasonally adjusted Purchase Index increased by 9 percent from one week earlier to its highest level since June. The unadjusted Purchase Index increased by 20 percent compared to the previous week and was 27 percent higher than the same week one year ago.  

“We saw significant rate volatility last week surrounding the Federal Open Market Committee meeting, and rate declines toward the end of the week likely drove applications from both prospective home buyers and borrowers looking to refinance,” said MBA Chief Economist Mike Fratantoni. “The 30-year fixed rate remained unchanged over the week even though there was substantial intra-week fluctuation, but we saw rate decreases in other loan products like the 15-year fixed, 5/1 ARM, and 30-year jumbo.”  

The FHA share of total applications decreased to 12.9 percent from 14.2 percent the week prior. The VA share of total applications decreased to 10.0 percent from 10.7 percent the week prior. The USDA share of total applications decreased to 0.7 percent from 0.8 percent the week prior.  

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) remained unchanged at 4.09 percent, with points increasing to 0.45 from 0.42 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate remained unchanged from last week.  

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 3.99 percent, its lowest level since May, from 4.04 percent, with points increasing to 0.36 from 0.26 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.  

The average contract interest rate for 30-year fixed-rate mortgages backed by FHA remained unchanged at 3.88 percent, with points decreasing to 0.33 from 0.35 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.  

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.31 percent from 3.33 percent, with points increasing to 0.42 from 0.26 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.  

The average contract interest rate for 5/1 adjustable-rate mortgages decreased to 2.95 percent, its lowest level since May, from 3.04 percent, with points increasing to 0.58 from 0.36 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.   The ARM share of activity increased to 6.9 percent of total applications.  

The survey covers more than 75 percent of all U.S. retail and consumer direct residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.