Mortgage Apps Jump Following Topple in Interest Rates

Mortgage application volumes saw a modest increase last week as interest rates tumbled, according to a report from an industry group.

The Mortgage Bankers Association (MBA) reported a 5.6 percent increase in its mortgage applications index for the week ending October 10. The rise includes adjustments for seasonal factors.

Unadjusted, the index climbed 6 percent week-over-week, MBA said.

The headline index got a boost from refinancing applications, which surged 11 percent over the week as the average 30-year fixed mortgage rate dropped to 4.20 percent, its lowest in more than a year.

"Growing concerns about weak economic growth in Europe caused a flight to quality into US assets last week, leading to sharp drops in interest rates. Mortgage rates for most loan products fell to their lowest level since June 2013," said Mike Fratantoni, chief economist at MBA. "Refinance application volume reached the highest level since June 2014 as a result, with conventional refinance volume at its highest since February 2014."

With the increase, the refinance share of mortgage activity increased to 59 percent of total applications, also the highest level since February.

On the other hand, the group's measure of home purchase mortgage applications fell a seasonally adjusted 1 percent. Unadjusted, purchase applications slipped 0.3 percent compared to the previous week and 4 percent year-over-year.