Led by a 21% increase in refinance applications, the Mortgage Bankers Association's (MBA) Market Composite Index grew for the first time in five weeks last week, increasing 14.6% on a seasonally adjusted basis. The seasonally adjusted Purchase Index decreased 8.5% from one week earlier.
‘Refinance application volumes are now close to the highest level this year,’ says Michael Fratantoni, the MBA's vice president of research and economics. ‘Purchase activity remains generally weak, but applications for conventional-purchase mortgages are now at their highest level since the beginning of May, following the expiration of the tax credit.’
Fratantoni explains that the previously seen surge in applications for Federal Housing Administration (FHA) loans was, as the MBA surmised, the result of potential buyers' wanting to get ahead of stricter FHA lending standards, which took effect Oct. 4.
"This conjecture was confirmed by the fact that, this week, FHA applications fell back to a level closer to the average seen over the past four months,’ he says.