Mortgage Apps Dragged Down by Purchases; Refis Rebound as Rates Drop

Even though mortgage interest rates decreased again, the Mortgage Bankers Association's (MBA's) Market Composite Index continued to see-saw, falling off slightly last week from the strong improvement it had shown the week before.  The Index, a measure of mortgage application volume, was down 0.4 percent on a seasonally adjusted basis during the week ended September 27 after a better than 5 percent increase the week before. On an unadjusted basis the Index decreased 1 percent compared to the week ended September 20.

While applications for refinancing climbed, it wasn't enough to overcome the week's decline in applications for home purchases.  MBA's seasonally adjusted Purchase Index was down 6 percent as was the unadjusted version of the index.  The latter was off 3 percent from its level during the same week in 2012.

Refinance Index vs 30 Yr Fixed

Purchase Index vs 30 Yr Fixed

Refinancing increased 3 percent and 63 percent of all mortgage applications received during the week were for refinancing compared to 61 percent the week before.  This was refinancing's largest market share since August.

Average contract interest rates for all of the products MBA tracks through its Weekly Mortgage Application Survey fell back to June 2013 levels last week.  All effective rates were also down from the week before. 

The contract rate for 30-year fixed-rate mortgages (FRM) with conventional balances of $417,000 or less was 4.49 percent with 0.34 point.  The previous week that rate had averaged 4.62 percent with 0.41 point.

The jumbo version of the 30-year FRM (loan balances over $417,000) decreased to 4.53 percent from 4.66 percent.  Points decreased to 0.22 from 0.29.

FHA-backed 30-year FRM had an average contract rate of 4.21 percent, down 11 basis points from the week before.  Points decreased to 0.35 from 0.37.

Fifteen-year FRM fell an average of 13 basis points to 3.55 percent.  Points for the 15-year did increase from 0.28 to 0.33 but the effective rate still fell.

The share of applications for adjustable rate mortgages (ARMs) was down from 7 to 6 percent.  The average interest rate for the 5/1 ARM decreased to 3.26 percent from 3.39 percent and points from 0.35 to 0.28. 

All contract rates are for loans with an 80 percent loan-to-value ratio.  Points include the origination fee.

MBA's survey covers over 75 percent of all U.S. retail residential mortgage applications.  Respondents include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100.