More Mortgage Applications in Face of Increased Rates

New mortgage applications increased 6.8% this week from one week prior, according to the Mortgage Bankers Association (MBA) Weekly Survey analyzing mortgage activity.

Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting says mortgage applications activity continued a strong showing last week even though 30-year fixed-rate mortgage and 15-year fixed-rate mortgage increased to their highest numbers since the end of August.

"Purchase applications were up more than 25% from a year ago, and the demand for higher-balance loans pushed the average purchase loan size to another record high. The strong interest in homebuying observed this summer has carried over to the fall," he said. "Despite the uptick in rates, refinance applications increased around 9% and were almost 86% higher than last year. Both conventional and government refinance activity, and in particular FHA refinances, picked up last week."

Other highlights from the report include:

• The Market Composite Index, a measure of mortgage loan application volume, increased 6.8% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 18% compared with the previous week.
• The Refinance Index increased 9% from the previous week and was 86% higher than the same week one year ago. The seasonally adjusted Purchase Index increased 3% from one week earlier. The unadjusted Purchase Index increased 13% compared with the previous week and was 25% higher than the same week one year ago.
• The refinance share of mortgage activity increased to 64.3% of total applications from 62.8% the previous week.
• The adjustable-rate mortgage (ARM) share of activity decreased to 2.2 percent of total applications.

As for which types of loans were active, the report showed:

• The FHA share of total applications increased to 10.1% from 9.7%.
• For VA mortgages, the share of total applications decreased to 12.0% from 12.3%.
• The USDA share of total applications increased 0.6% from 0.5% the week prior.

The survey, which can be read in its entirety here, specifically details various interest rate trends. It covers more than 75% of all American retail residential mortgage applications and has been conducted every week since 1990.