The Market Composite Index, a measure of mortgage loan application volume, increased 4.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3.6 percent compared with the previous week and was 13.5 percent lower than a year ago. The Refinance Index increased 8.0 percent from the previous week, but was 16.3 percent lower than the same week last year. The seasonally adjusted Purchase Index decreased 9.1 percent from one week earlier. The unadjusted Purchase Index decreased 10.1 percent compared with the previous week and was 1.1 percent lower than the same week one year ago.
“Unprecedented volatility in the stock market last week amid additional signs that the economy has slowed led to further drops in mortgage rates, with the 15-year rate reaching a new low for the MBA survey,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “Purchase application activity fell sharply over the previous week, likely the result of potential homebuyers hesitant to purchase in this highly volatile and uncertain environment.”
Fratantoni continued, “Refinance application volume increased substantially for the week, although there was substantial variation across the market. In September MBA’s Weekly Applications Survey will transition to an expanded sample that covers 75% of the retail market rather than the current sample that covers roughly 50% of the retail market. That expanded sample showed a significantly larger increase in refinance applications than the current sample, with some lenders reporting increases in refinance applications in excess of 50 percent for the week. The big differences in refinance volumes were likely driven by the decisions of some lenders not to drop rates last week, largely due to the need to manage their pipelines.”
The four week moving average for the seasonally adjusted Market Index is up 6.9 percent. The four week moving average is down 2.2 percent for the seasonally adjusted Purchase Index, while this average is up 10.1 percent for the Refinance Index.
The refinance share of mortgage activity increased to 78.8 percent of total applications from 75.6 percent the previous week, the highest the refinance share has been since November 2010. The adjustable-rate mortgage (ARM) share of activity decreased to 5.8 percent from 6.1 percent of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.32 percent from 4.37 percent, with points decreasing to 0.87 from 1.07 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate also decreased from last week. The 30-year fixed contract rate has decreased for three straight weeks and is at a new low for this year.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.47 percent from 3.52 percent, with points increasing to 1.08 from 0.96 (including the origination fee) for 80 percent LTV loans. The effective rate also decreased from last week. The 15-year contract rate is at lowest level in the history of this survey.