A surge in refinancing helped drive up mortgage applications activity for the week ending Oct. 4, according to data from the Mortgage Bankers Association (MBA).
The Market Composite Index increased 5.2 percent on a seasonally-adjusted basis from one week earlier, while the unadjusted index increased five percent compared with the previous week. The Refinance Index increased 10 percent from the previous week and was 163 percent higher than the same week one year ago, while the refinance share of mortgage activity increased to 60.4 percent of total applications from 58.0 percent the previous week. In comparison, the seasonally adjusted and the unadjusted Purchase Index both decreased by one percent from one week earlier, although the latter was 10 percent higher than the same week one year ago.
Among the federal loan programs, the FHA share of total applications decreased to 10.3 percent from 10.4 percent the week prior and the VA share of total applications decreased to 12.3 percent from 12.4 percent while the USDA share of total applications remained unchanged from 0.5 percent.
“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,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “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 percent–the lowest level in a month. As seen a few times this year, the large drop in rates caused another surge in refinance applications. The refinance index increased 10 percent to its highest level since late August, with both conventional and government refinances experiencing an upswing.”