Mortgage Applications Bounce After Post-Labor Day Plunge

After plummeting at the start of September, mortgage loan application volumes showed a recovery in the latest weekly index released by the Mortgage Bankers Association (MBA).

MBA's Market Composite Index, a measure of application levels, rose 7.9 percent on a seasonally adjusted basis for the week ending September 12, the group reported. The bounce followed a 7.2 percent decline in the previous week, which included an adjustment to account for the Labor Day holiday.

On an unadjusted basis, the index came back 19 percent.

The refinance component of the index increased 10 percent last week from the week prior, bringing the refinance share of total mortgage applications up 2 percentage points to 57 percent. That increase came even as mortgage rates—a key factor in refinancing demand—moved up to an average 4.36 percent for a 30-year fixed-rate loan.

Meanwhile, the purchase loan measure, which economists recently observed has been at a nearly 20-year low, bounced up a seasonally adjusted 5 percent. Unadjusted, that index was up 14 percent over the week but still down 10 percent compared to a year ago.

MBA's chief economist, Mike Fratantoni, laid out the numbers from a slightly larger scope: "Given the volatility in activity around the long weekend, it can be helpful to look at the change over a two week span: refinance applications are down 1.4 percent while purchase applications are up 2.1 percent."

Though the weekly pickup in applications might come as welcome news after the previous drop, the fact remains that mortgage activity this year has been more subdued than most would hope, pushing many banks to refocus their efforts into other areas and cut mortgage staff.

While some continue to watch for signs of resurgence in the market, others have suggested it's the industry itself that will be forced to change.

"Is the housing market going to be like it was in 2000? Probably not," said David Zugheri, co-founder and EVP of Envoy Mortgage, in a recent interview with MReport. "We're really just shaping ourselves up to be a smaller housing market."