Mortgage application volume increased 11.6% during the week ended Oct. 17, with most of that growth coming from a sharp rise in applications for refinances, according to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.
On an unadjusted basis, volume increased 12% compared with the previous week.
The MBA's figures do not factor in the Columbus Day holiday, however, considering a majority of Americans work on that holiday, it makes sense that it wouldn't have much of an impact on application volume.
As was the case the previous week, a majority of the increase was driven by low interest rates, which in turn boosted applications for refinances by a whopping 23% – the biggest increase in application volume for refinances since November 2013. Meanwhile, applications for purchases fell 5% compared to the previous week.
On an unadjusted basis, purchase applications decreased 5% compared with the previous week and were 9% lower compared to the same week one year ago.
‘Continuing concerns about weak economic growth in Europe and a few U.S. economic indicators that came in below expectations caused a flight to quality into U.S. Treasuries last week, leading to sharp drops in interest rates,’ says Mike Fratantoni, chief economist for the MBA, in a statement.Â ‘Mortgage rates have fallen close to 30 basis points over the last four weeks. Refinance application volume reached the highest level since November 2013 as a result, and the average loan balance for refinance applications increased to $306,400, the highest level in the survey's history.’
The refinance share of mortgage activity increased to 65% of total applications – up from 59% the previous week to reach the highest level since December 2013.
The average rate for a 30-year fixed-rate mortgage (FRM) with conforming loan balance ($417,000 or less) was 4.10%, down from 4.20% the previous week.
The average rate for a 30-year FRM with jumbo loan balance (greater than $417,000) was 4.03%, down from 4.14% the previous week to reach the lowest level since May 2013.
The average rate for a 30-year FRM backed by the Federal Housing Administration was 3.81%, down from 3.90% to reach the lowest level since June 2013.
The average rate for a 15-year FRM was 3.28%, down from 3.41% to reach the lowest level since May 2013.
The average rate for a 5/1 adjustable-rate mortgage (ARM) was 2.94%, down from 3.05% to reach the lowest level since June 2013. The ARM share of activity increased to 9.4% of total applications, the highest level since June 2008.
This week the MBA added a new section to its applications survey breaking down application volume by loan type. The FHA share of total applications was 8.3%, down from 9.5% the previous week. The Veteran's Administration share of total applications was 9.6%, up from 8.8% the previous week. The USDA share of total applications was 0.8%, down from 1.0% the previous week.