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Mortgage applications jumped 5.2% from one week earlier as a drop in rates caused another surge in refinances, according to the Mortgage Bankers Association.
The MBA’s Weekly Mortgage Applications Survey for the week ending Oct. 4 found the refinance index increased 10% from the previous week and was 163% higher than the same time one year ago. The refinance share of mortgage activity increased to 60.4% of total applications from 58% the previous week.
Meanwhile, the seasonally adjusted purchase index decreased 1% from one week earlier and the unadjusted purchase index decreased 1% compared with the previous week and was 10% higher than the same week one year ago.
“U.S. Treasury rates moved sharply lower last week, as data showing weakness in the services sector was a sign that slowing economic growth is not confined to the manufacturing sector. This in turn caused a flight to safety by investors, resulting in mortgage rates dropping across the board, with the 30-year fixed rate decreasing nine basis points to 3.9%, the lowest level in a month,” Joel Kan, the MBA’s associate vice president of economic and industry forecasting, said in a press release.
“As seen a few times this year, the large drop in rates caused another surge in refinance applications. The refinance index increased 10% to its highest level since late August, with both conventional and government refinances experiencing an upswing.”
Adjustable-rate mortgage activity decreased to 5.3% from 5.5% of total applications and the share of Federal Housing Administration-insured loan applications decreased to 10.3% from 10.4% the week prior.
The share of applications for Veterans Affairs-guaranteed loans decreased to 12.3% from 12.4% and the U.S. Department of Agriculture/Rural Development share remained unchanged from 0.5%.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased 9 basis points to 3.9%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350), the average contract rate declined 8 basis points to 3.9%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased 4 basis points to 3.75%. For 15-year fixed-rate mortgages, the average fell 8 basis points to 3.35%. The average contract interest rate for 5/1 ARMs dropped to 3.25% from 3.42%.
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