Fall is in the air and that could be a good thing for the mortgage industry since summer saw a refinancing drought as mortgage rates climbed a full percentage point from their historic lows.
Both purchase and refinance mortgage applications increased 11.2 percent last week, from one week earlier, according to data from the Mortgage Bankers Association released Wednesday.
The previous week’s results included an adjustment for the Labor Day holiday.
The refinance component of the index shot up a healthy 18 percent from the previous week. Moreover, the refinance share of mortgage activity increased to 61 percent of total applications from 57 percent the previous week.
The purchase component, which measures applications for buying a home, increased 3 percent from one week earlier and is close to the same level as two weeks ago, before the holiday.
Both components are seasonally adjusted.
Last week, the bankers reported that mortgage applications plummeted 13.5 percent from the previous week, while the refinance share had decreased to its lowest level since April 2010.
This week, the MBA said that the adjustable-rate mortgage (ARM) share of activity decreased to 7 percent of total applications.
The HARP (Home Affordable Refinance Program) share of refinance applications increased to 40 percent, from 38 percent the week before, and is the highest since MBA started tracking this measure in early 2012. HARP is the government-sponsored refi plan for “underwater” borrowers with mortgages owned by Fannie Mae or Freddie Mac.
Here is the recap on interest rates from the MBA:
- The average contract interest rate for 30-year fixed-rate mortgages, with conforming loan balances ($417,000 or less), decreased to 4.75 percent from 4.80 percent, for 80 percent loan-to-value ratio (LTV) loans.
- The average contract interest rate for 30-year fixed-rate mortgages, with jumbo loan balances (greater than $417,000), decreased to 4.83 percent from 4.84 percent, for 80 percent LTV loans.
- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA (Federal Housing Administration) decreased to 4.50 percent from 4.56 percent, for 80 percent LTV loans.
- The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.81 percent from 3.83 percent, for 80 percent LTV loans.
- The average contract interest rate for 5/1 ARMs decreased to 3.54 percent from 3.59 percent, for 80 percent LTV loans.